Private-sector activity slumps to 20-month low in March

April 5, 2016 6:30 AM

"Destocking continued for a ninth consecutive month in March, and this trend is likely to be exacerbated by the acceleration in the contraction in new orders," Naidoo said.

A worker inspects cars at Nissan's manufacturing plant in Rosslyn, outside Pretoria, in a file photo.

South African private-sector activity declined to its lowest in almost two years in March, as Africa's most advanced economy lost output and shed jobs at a record pace, a survey showed on Tuesday.

The Standard Bank Purchasing Managers' Index (PMI), compiled by Markit, fell to 47.0 in March from 49.1 in February, its lowest since July 2014.

The survey provides an early indication of operating conditions, with readings below 50 signalling reduced economic activity.

Output by private-sector companies declined in March for the 11th straight month. Companies cited a slump in global commodity prices, a recent drought and poor market conditions as constraints on both output and new orders.

New orders fell for the fourth straight month, while jobs were lost at the fastest rate in the survey's history. "Both supply- and demand-side PMI indicators imply continued weakness in South Africa’s economy," said Kuvasha Naidoo, an economist at Standard Bank.

South Africa's economy grew just 1.3 percent in 2015. The central bank sees growth at 0.8 percent in 2016, with analysts saying the risk of recession remained high, particularly with pressure to avoid credit downgrades mounting.