JOHANNESBURG, Jan 4 (Reuters) – South Africa’s private sector activity contracted for the sixth month in a row in December as both output and new orders fell further while purchases also dropped, though the overall rate of decline eased, a survey showed on Friday.
The Purchasing Managers’ Index (PMI), compiled by IHS Markit, rose to 49.0 from 48.2 in November, still below the 50 mark separating expansion from contraction that was last reached in June.
Three of the five sub-indices were contracted, but all showed slower rates of decline, signalling a recovery from October’s four-year low.
“Reports of a turnaround in the economy helped ease the decline,” said IHS Markit economist David Owen.
“The headline PMI was at its highest since July when conditions first deteriorated. Firms reported movement in a number of sectors, with the jobs market also elevated into expansionary territory,” Owen said.
Africa’s most industrialised economy went into recession in the first half of 2018 but grew by an unexpected 2.2 percent in the third as manufacturing and agricultural production accelerated.
South Africa’s growth outlook however remains uncertain, with a widening budget deficit and ballooning debt as well as trade wrangles between China and the United States posing big risks to an already modest growth forecast of 1.7 percent for 2019.
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(Reporting by Mfuneko Toyana; Editing by John Stonestreet)