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'Positive signals' for SA businesses as PMI stabilises

Business conditions in SA’s private sector economy deteriorated “only slightly” at the beginning of 2019, according to the latest IHS Markit Purchasing Manager's Index released on Tuesday morning.

Headline PMI rose to 49.6 in January, up from 49 in December 2018.

However, it still came in below the neutral 50-point mark. Figures greater than 50 indicate overall improvement, while figures under 50 indicate deterioration. 

IHS Markit's headline PMI is an indicator of private sector business performance. It is derived from indicators for new orders, output, employment,suppliers’ delivery times and stocks of purchases.

The rate of decline was the weakest in the current seven month period of contraction, as output and new orders fell marginally, said IHS Markit in a statement.

David Owen, an economist at IHS Markit, which compiles PMI survey, said the latest data included some “positive signals for South African businesses at the start of the year, with the PMI edging close to stabilisation and export orders growing for the first time since late 2017”.

“With price inflation also remaining cool, the survey reflected a more settled economy than last year. This points towards a modest recovery in the private sector during 2019, as indicated by IHS Markit's forecast of 1.4% annual GDP growth,” he said.

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