PMI falls as output declines

Johannesburg – The private sector shrank slightly in January, a survey showed on Wednesday, ending a four-month period of continuous growth.

The HSBC Purchasing Managers' Index (PMI) fell to 49.8 as companies reported declines in output and new orders, while new export orders were also down.

December's PMI reading was 50.2, just above the 50 line that divides growth from contraction.

"There was a broad-based weakening in South Africa’s economic environment," HSBC economist David Fualkner said.

"In recent months, headline PMI readings have pointed towards fading growth momentum, suggesting South Africa’s growth prospects in 2015 remain fragile."

The South African Reserve Bank last week cut its 2015 gross domestic product forecast to 2.2% growth from 2.5%.

The economy has struggled to recover from a 2009 recession. Companies are hampered by frequent power cuts as cash-strapped state utility Eskom battles to meet demand.

Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.