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SA private sector business conditions again down, but rate of decline eases

Jan 04 2019 13:46
Lameez Omarjee

South Africa's private sector business activity deteriorated for the sixth consecutive month in December, according to the latest IHS Markit Purchasing Manager's Index released on Friday. 

While PMI rose from 48.2 in November to 49 in December 2018, it still came in below the neutral 50-point mark. Figures greater than 50 indicate overall improvement, while figures under 50 indicate deterioration. 

December's print of 49 is the highest level since conditions started to decline in July 2018, indicating that the drop appears to be softening.

The IHS Markit Sout African PMI reflects local private sector business performance and is based on indicators for new orders, employment, suppliers' delivery times and stocks of purchases. 

"The latest reading was indicative of a slower contraction in both output and new orders in December," stated the report's authors. "While many firms highlighted a continued slump in demand, which led to lower output, others found that activity was boosted by signs of a turnaround in the economy. Likewise, demand from abroad fell at the softest rate in six months.

"Purchasing activity at South African firms continued to fall in December. However, as with output and new orders, therate of decrease was slower than in November. Accordingly,the decline in demand for inputs helped suppliers reduce delivery times for the first time in two years.

IHS Markit economist David Owen noted in a commentary on the latest figures that SA business confidence levels had reached an eight-month high in December, with firms expecting 2019 to be a more positive year for the country.

"It is hoped that economic reforms will prevent another dip in output next year, although the summer's elections may add extra uncertainty," he said.

The SA economy slipped into a recession in the first half of the 2018, which it exited after positive GDP growth in the third quarter. 

business confidence  |  pmi  |  sa economy
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