The Standard Purchasing Index (PMI) fell to 46.90 points from 48points in September, marking the fourth straight contraction in business activity and the sharpest in the health of the private sector since July 2014.
David Owen, an economist at IHS Markit, which compiled the PMI, said businesses were affected by a number of economic factors leading to weak demand across. Owen said companies raised selling prices at the fastest rate in more than two years.
“Output price inflation was at a 27-month high during October. Companies found that current economic conditions have led to a number of cost pressures, including rising fuel prices and the weakening value of the rand,” Owen said. “Companies responded with a steep reduction in purchasing activity, raising worries of a decline in gross domestic product in the fourth quarter.”
The survey rode the “Ramaphoria" wave in February and registered 51.4points, signalling an improvement in business conditions for the first time in seven months. However, the country’s economy recorded a technical recession in the second quarter.