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Private sector activity shrinks in Dec as economy struggles

January 6, 2016 7:42 AM

"Poor market conditions and a lack of demand were some of the factors weighing on the country's performance."

A worker walks near a row of cars at BMW's manufacturing plant in Rosslyn, outside Pretoria, September 13, 2010. REUTERS/Siphiwe Sibeko

South African private sector activity shrank at a faster pace in December, with output dropping and new business falling for the sixth time in seven months, a survey showed on Wednesday.

The Standard Bank Purchasing Managers' Index (PMI) compiled by Markit fell to 49.1 in December after recovering to 49.6 in November, as companies shed jobs and bought less. Readings below 50 denote contractions in activity overall.

"South Africa's private sector remained in the doldrums in December, thereby continuing the trend that has defined the second half of 2015," Markit economist Oliver Kolodseike said.

Companies in Africa's most advanced economy have cited an unstable macroeconomic environment as one major hindrance to business, with economic growth estimated to have stagnated at

around 1.5 percent in 2015. The rand also lost about a quarter of its value

against the dollar in 2015, tumbling to a new low in December after President Jacob Zuma fired respected Finance Minister Nhlanhla Nene and then replaced his replacement within a week in a botched reshuffle.

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