South African private sector activity shrinks again in January -PMI
JOHANNESBURG - Activity in South Africa’s private sector shrank for the ninth consecutive month in January albeit at a slower pace, as weak demand, lack of investment and power cuts weighed on output and new orders, a survey showed on Wednesday.
IHS Markit’s Purchasing Managers’ Index (PMI) rose to 48.3 in January from 47.6 in December, remaining below the 50 level that separates expansion from contraction.
All five subindexes in the survey were in contractionary territory, although output and new orders fell at a slower pace than in the previous month.
“The rate at which output fell was the weakest for three months, albeit still solid overall,” IHS Markit said in a statement. “Companies cited falling demand, a lack of investment and partial load shedding (power cuts) for the decline in activity.”
State power utility Eskom’s creaking fleet of coal-fired plants have struggled to meet electricity demand, forcing the firm to implement rotational power cuts, locally known as load shedding.
The power cuts have sapped investor confidence in Africa’s most industrialised economy.
President Cyril Ramaphosa said in January the government will embrace efforts by businesses to generate their own electricity, amid growing frustration at red tape that throttles private power generation.