JOHANNESBURG: South African private sector activity contracted for a ninth consecutive month in February as output and new orders fell on the back of sluggish economic growth, a survey showed on Thursday.
The Standard Bank Purchasing Managers’ Index ( PMI), compiled by Markit, fell to 49.1 in February after rising to 49.6 in January. Readings below 50 denote contractions in activity and the index has been below that mark since June last year. Downward pressure came from lower output and new orders, which companies attributed to a weaker economic environment.
Overall input costs increased sharply in February, hurt by a weaker rand, Markit said. “Inflationary pressures may start to erode some of South Africa’s competitive advantage; the rise in input prices resulted in companies increasing their selling prices by one of the fastest rates recorded over the past two years,” Standard Bank economist Kuvasha Naidoo said.
Africa’s most advanced economy has struggled to grow meaningfully after a 2009 recession, now aggravated by a severe drought. The government forecasts growth of 0.9 percent this year compared with an estimated 1.3 percent in 2015, which would be the lowest rate of expansion since the recession.
Disappointing growth is likely to heighten fears South Africa’s credit rating will be cut below investment grade and further unnerve investors concerned about President Jacob Zuma’s handling of the economy.
