Standard Bank SA PMI falls in December

January 6, 2016, 3:55pm

Business Day Live
Photo: Thinkstock/Business Day Live

SOUTH Africa’s private sector is in a state of extreme distress amid poor market conditions and a lack of demand.

The Markit/Standard Bank SA headline purchasing managers index (PMI) fell to 49.1 in December from 49.6 in November, continuing the weak trend which began in June 2015.

About 400 private-sector executives at companies across various sectors were surveyed on current business conditions including new orders, employment and input prices.

A reading below 50 shows deterioration in private-sector business conditions.

Companies reported a renewed decline in new business, following a stabilisation in November. New orders from foreign markets also decreased during the month.

As has been the case since September, employment numbers were marginally down in December.

"With business outstanding falling further and conditions in the sector showing no signs of immediate improvement, companies continued to cut jobs, although the rate of job shedding remained marginal overall," said Markit economist Oliver Kolodseike.

Input costs rose further in December. Companies continued to pass on higher costs to their clients, as highlighted by a rise in output prices.

Subdued demand remained one of the main reasons for companies to reduce their buying activity in December.

Lower input buying in turn contributed to a further reduction in pre-production inventories.