Cape Town - Poor market conditions and a lack of demand were the main drivers behind a drop in the latest seasonally adjusted Standard Bank South Africa Purchasing Managers' Index (PMI) from 49.6 to 49.1.
Readings above 50 for the survey signal an improvement in business conditions on the previous month, while readings below this level show a deterioration.
December data highlighted a continuation of the downturn in South Africa’s private sector that started in June, with business conditions deteriorating at a slightly stronger rate than in November.
"South Africa's private sector remained in the doldrums in December, thereby continuing the trend that has defined the second half of 2015," said Markit economist Oliver Kolodseike.
Companies reported a marginal decline in new business, following a stabilisation in the previous month. New orders from foreign markets fell in December while there was a slight drop in private sector employment, as has been the case since September.
“With business outstanding falling further and conditions in the sector showing no signs of immediate improvement, companies continued to cut jobs, although the rate of job shedding remained marginal overall," said Kolodseike.
Input costs rose further in December. The rate of inflation was little changed from the previous month, as a weaker
increase in average staff costs offset a sharper rise in purchase prices.
Companies continued to pass on higher costs to their clients as highlighted by a rise in output prices, which increased at the fastest pace since May.
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