South Africa: PMI signals contraction in economic activity in August
September 5, 2017
Activity in the private sector fell into contractionary territory in August for the second time in 12 months. The Standard Bank Purchasing Managers’ Index (PMI) dropped from July’s 50.1 to a one-year low of 49.8 in August, coming in below the six-year long-run survey average of 50.7. A reading below 50 signals deteriorating domestic business operating conditions.
August’s print reflects a decline in both output and new business. Lower output reflects a decline in new business, which dropped for the fifth consecutive month and posted the steepest decrease since April 2016. Contrasting the decline in these two sub-components, job creation picked up steam in the surveyed month, contributing to a decline in outstanding business. Regarding the latest price trends, the rise in input costs quickened because of higher prices for steel and energy products. Output prices rose as well.