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Johannesburg - South Africa's private sector expanded at its slowest rate in five months in December as output and new orders declined, a survey showed on Tuesday.
The HSBC Purchasing Managers' Index (PMI) slipped to 50.2 in December from 50.5 in November, as demand from the domestic market slackened while expansions in output and new orders fell, albeit only marginally.
"Following a temporary boost to economic activity after the resolution of protracted strikes, the headline PMI suggests the economy has settled back into a pattern of sluggish growth," HSBC economist David Faulkner said.
"Worsening demand conditions principally reflected waning domestic demand, since export orders expanded for the fourth consecutive month and at their strongest pace for almost two years."
New export orders increased at their strongest rate since February 2013, the HSBC said. Some of the panelists surveyed mentioned improved demand from European markets. Inflationary pressures in the private sector eased further in December to the weakest in the three-and-a-half year survey history.
"The impact of lower oil prices is becoming more evident. Input cost inflation was at a record-low, while output prices increased at their slowest for five months," Faulkner added.
The PMI is a weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases in the private sector.
Readings above 50.0 signal improvements in business conditions while those below show a deterioration.
