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Downturn in South Africa’s private sector extends to nine months

Staff writer |
February data signalled a continuation of the downturn in South Africa’s private sector that started last June.

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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.


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