South African private sector activity contracted for the second consecutive month in October due to power cuts, port strikes and high inflation, a survey showed today.
S&P Global’s South Africa purchasing managers’ index (PMI) crept up to 49.5 in October from 49.2 in September, staying just below the 50.0 line that divides expansions in activity from contractions.
Wholesale and retail companies recorded the biggest falls in both output and sales. Job numbers at South African companies were flat in October, following seven months of growth, as a decline in new orders hampered firms’ ability to hire.
“The South African private sector continued to suffer as a result of the national load shedding programme in October, with latest survey data indicating another solid decrease in output,” said David Owen, an economist at S&P Global Market Intelligence.
An 11-day Transnet strike was widely mentioned by companies as a cause of decline because it disrupted port operations and lengthened delivery times. Backlogs at ports would likely continue for the rest of the year, Owen added.
However, companies maintained a positive view towards the next 12 months, with over half of all survey respondents (53%) projecting an expansion in output, the survey said.
REUTERS