South Africa: Private sector activity contracts at the fastest pace in the survey’s history in March
The IHS Markit Purchasing Managers’ Index (PMI) fell from 48.4 in February to 44.5 in March, the lowest print in the survey’s history, which started in July 2011. Thus, the index fell further below the critical 50-threshold that separates deterioration from improvement in private sector business conditions, where it has been for the past eleven months.
March’s deterioration reflected a slump in output and new orders, with both recording record lows. In addition to supply disruptions caused by rolling blackouts, companies reported a large decline in consumer demand as the Covid-19 pandemic took its toll. On the upside, the rate of job losses was slower than in the previous month. Meanwhile, a sharper increase in input prices drove businesses to increase output prices. Lastly, the one-year outlook for output deteriorated, albeit remained positive.
With regards to January’s developments, David Owen, Economist at IHS Markit, noted:
“Demand in domestic markets fell drastically as consumers and firms cut back on new expenditure and travel, while export sales also declined at a record pace. Despite this, businesses reduced employment only slightly, though there may be a much larger round of job losses in April as the lockdown takes effect. Slower deliveries were also reported by firms, as supply chains deteriorated due to several border closures across the world. Many respondents found this led to supply shortages, with stocks of purchases contracting sharply.”