JOHANNESBURG (Reuters) - Activity in South Africa’s private sector shrank for the seventh consecutive month in November as output tanked, new orders slipped and employment contracted, a survey showed on Wednesday, a day after headline growth economic figure again disappointed.
IHS Markit’s Purchasing Managers’ Index (PMI) fell to 48.6 from 49.4 in October, dropping further below the 50 level that separates expansion from contraction.
The latest reading marked the sharpest rate of contraction since July, echoing data on Tuesday that showed gross domestic product shrank for the second time in three quarters, by 0.6%, in the three months from July to September.
The purchasing managers’ index, among the most reliable leading indicators of economic activity, showed all five sub-indices in contraction in November, with output at its lowest in 12 months as new orders declined and exports softened.
“Both employment and input stocks decreased, with companies signaling little expectation of an immediate boost to the domestic economy,” said economist at IHS Markit David Owen.
“With a number of issues facing the country, firms generally placed their optimism upon company-led investment rather than stronger national growth.”
Initial optimism toward Cyril Ramaphosa has waned since he took over as president in early 2018 promising an investment-friendly program of reforms and investment. Business confidence is still subdued as growth has remained weak and the government’s fiscal position fragile.
Reporting by Mfuneko Toyana; editing by John Stonestreet