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Private sector in South Africa hit by mining strike

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Staff writer ▼ | April 4, 2014
Africa mining strikeThe seasonally adjusted headline PMI fell from February's 51.5 to 50.2 in March, signalling the weakest improvement in operating conditions in the current six- month period of growth.

The PMI was boosted by a rise in employment levels and an increase in stocks of purchases, while output and new orders had a negative contribution to the headline index. Meanwhile, suppliers' delivery times were broadly unchanged. March data signalled declines in output and new orders in South Africa's private sector amid reports of disruptions caused by the mining strike and unusually bad weather.

However, the rates of contraction were indicative of only marginal reductions. The fall in new orders was driven by lower domestic demand, while new export orders rose for a second successive month. Anecdotal evidence suggested that the weak rand had contributed to the rise. Companies mentioned other African countries and the UAE as sources of export growth in March.

Backlogs of work fell again in March, having risen in the previous month. The rate at which work outstanding was depleted accelerated to the sharpest since last June and was linked to efficiency improvements and lower order intakes.

Meanwhile, employment levels rose at the joint- sharpest rate in eight months and suppliers' delivery times were broadly unchanged since the preceding month.

Overall input costs rose sharply in March, with the rate of inflation among the highest on record. Increased fuel prices, exchange rate fluctuations and higher steel prices led to the rise in purchase prices, while the hiring of additional workers and increased living costs were reasons for the latest rise in average staff costs.

South Africa's private sector companies passed higher input costs on to clients, resulting in a rise in charges. Despite falling output and new orders, companies increased their purchasing activity in March. Meanwhile, stocks of purchases rose for the third month in a row.

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