South Africa Private Sector Contracts In May

South Africa’s private sector contacted in May as new orders, export sales and output declined, while input prices increased, survey data from IHS Markit showed on Wednesday.

The headline South Africa purchasing managers’ index, or PMI, fell to 49.3 in May from 50.3 in April.

Any reading below 50 indicates a contraction in the sector.

New orders declined at the quickest pace since November last year and export sales fell at a marginal rate.

Rise in price of oil affected the purchasing activity and average wages increased with rise in job creation.

Input cost inflation rose slightly at a higher rate and output prices rose for the first time in three months.

Few firms cut their workforce numbers due to growing sentiments level.

The optimism level for future output growth improved to the highest in thirteen months.

“Demand was partly affected by the election, although panel members also reported difficult economic conditions across the private sector,” David Owen, economist at IHS Markit, said.

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