Private-sector activity contracts again in August – PMI

South African private sector activity remained in contraction for a fourth consecutive month in August as new orders and output fell, albeit at slower rates, a survey showed on Wednesday.

IHS Markit’s Purchasing Managers’ Index (PMI) rose to 49.7 in August from 48.4 in July, remaining below the 50 point mark that separates expansion from decline.

All five sub-indexes in the survey were improved from a month before although three still showed a contraction, with the new orders component falling for the 14th consecutive month, which consequently weighed on output.

“Weak economic sentiment weighed on the private sector again in August,” said David Owen, an economist at IHS Markit.

“Companies noted a further drop in customer turnout, as the disappointment of the first quarter economic growth results continued to dampen spending.”

South African GDP grew more than expected in the second quarter of this year thanks to a recovery in mining and manufacturing, data showed on Tuesday, after a shock contraction in the first quarter.