Downturn in South Africa’s private sector extends to nine months
Output and new orders both fell at accelerated rates, buying activity declined and work-in-hand decreased markedly. Meanwhile, input costs rose at the steepest rate in nearly two years, which in turn led to a sharp increase in output charges.
The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. Operating conditions at South African private sector companies deteriorated for a ninth successive month in February.
This was highlighted by the seasonally adjusted Standard Bank South Africa PMI registering 49.1. This was down from 49.6 in January and pointed to a modest worsening of conditions.
The main downward contributions to the headline index came from sharper declines in output and new orders, which companies generally attributed to a fragile economic environment. The data highlighted a broadbased decrease in new order intakes, as new export orders also fell. ■