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Johannesburg - South Africa's seasonally adjusted purchasing managers' index fell back into contraction territory at 49.3 in March from 53.6 in February, after a decline in new sales orders, sponsor Kagiso Tiso Holdings said on Tuesday.
The data points to weak output in the first quarter of the year from the factory sector which contributes about 15% to GDP but has been plagued by weak demand both locally and from overseas markets.
New sales orders were down 8.2 points in March while the business activity index fell 4.5 points 47.7. The employment index also fell by 3.1 points.
The PMI has struggled below the 50 mark which marks the difference between expansion and contraction since September, with the exception of February's rebound.
"In light of slowing domestic consumer spending and the prolonged recession in Europe, the current level of new sales orders is probably more realistic," said Abdul Davids, head of research at Kagiso Asset Management.
"Renewed concerns around the outlook for the European economy, our largest export market ... may have fuelled the more downbeat business expectations."
The upward trend in input costs seen over the last few months continued in March, reflecting a sharply weaker rand.
