Standard Bank PMI continues contraction in October

06 November 2017

The South African private sector’s purchasing manager’s index (PMI) remained below the neutral 50-point mark in October, indicating further deterioration in the business climate, Standard Bank’s latest survey shows.

Despite a marginal uptick to 49.6 in October from a reading of 48.5 in September, this marked the third consecutive month of contractionary domestic business conditions, albeit at a slower pace.

“The continued deterioration in the economy-wide PMI is reflective of weak domestic economic activity alongside depressed business and consumer confidence.

“The decline in the PMI is likely to persist in the near term amid continued domestic political turmoil and a bleak fiscal and economic outlook reflected in the Medium Term Budget Policy Statement,” explained Standard Bank economist Thanda Sithole.

Continued lower underlying demand and challenging economic factors dragged the output, as business activity declined for the seventh successive month in October.

New orders and new business from abroad remained under pressure, with exports having declined for the first time in three months amid low investor demand.

This led to a further contraction in purchasing activity, which in turn, resulted in falling inventories for the second month in a row.

“Inflationary pressures continued, with rising cost burdens causing companies to increase the prices of their products and services,” the survey showed.

However, employment increased after declining in September. 

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