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South African private sector stagnates in August

Staff Writer | September 6, 2017
The Standard Bank South Africa Purchasing Managers’ Index (PMI) fell to 49.8 in August, from 50.1 in July, signalling a broad stagnation in overall private sector operating conditions midway through the third quarter of 2017.
South African private sector
Africa   Standard Bank South Africa PMI
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.

The survey is sponsored by Standard Bank and produced by IHS Markit.

The fall in the PMI in August reflected declines in output and new business.

The impact of these was partly offset by stronger growth of employment, lengthening suppliers’ delivery times and higher input stocks.

Private sector business activity in South Africa declined for the fifth successive month in August.

The rate of contraction quickened slightly since July, and was the second-fastest registered since April 2016.

Lower output was linked to declining intakes of new work.

New business fell for the second time in three months, and at the fastest rate since April 2016.

This was despite a rise in new export sales for the first time in ten months.

More positively, private sector employment in South Africa continued to expand in August.

The rate of job creation strengthened to the fastest since January, and contributed to a third successive decline in outstanding business.

Purchasing operations were cut back in August as the volume of incoming new business fell.

Input buying in the private sector declined for the third time in four months, albeit at a marginal rate.

Stocks of purchases also expanded further, and suppliers’ delivery times lengthened.

Input price inflation in the South African private sector sharpened to a seven-month high in August.

This mainly reflected a faster rate of purchase price inflation, linked to higher steel and fuel costs.

In contrast, average staff costs fell for the first time since the survey began in July 2011.

Prices charged for goods and services rose at the fastest rate since January.