South African private sector stagnates in August
The South African private sector’s purchasing manager’s index (PMI) slipped below the neutral 50 point mark in August, indicating a broad stagnation in the business climate midway through the third quarter of this year, Standard Bank’s latest survey data shows.
The Standard Bank PMI survey, produced by IHS Markit, fell to 49.8 in August from 50.1 in July, on the back of a decline in output and new business and the first drop in wages in the six-year survey's history.
The second-lowest over the past year and below the six-year survey average of 50.7, the PMI remained in contractionary territory for three consecutive months, indicating a continued deterioration in domestic operating business conditions.
“The fall in the PMI in August was largely driven by the output and new orders subcomponents. Output fell to 48.2 from 48.5 and has been in contraction for five successive months. New orders, a proxy for demand, dropped to 48.9 from 50.8,” said Standard Bank economist Thanda Sithole.
The employment index, however, edged up despite South Africa’s stubbornly high unemployment rate and looming job losses in the mining sector.
The stock of purchases index also ticked up to 50.6 from 50.4, reflecting inventory restocking,” Sithole pointed out.
However, policy uncertainty and political turmoil will likely keep the private sector in its volatile state in the near term.
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