South African Private Sector Remains In Contraction

South Africa’s private sector activity deteriorated for the second straight month in January amid demand and supply-side challenges due to the port crisis in Durban, survey results from S&P Global showed Monday.

The purchasing managers’ index rose to 49.2 in January from 49.0 in December. However, any score below 50.0 indicates contraction.

New orders fell for the ninth successive month in January, and this time at the fastest pace in a year. Sluggish demand in the business sector was mainly due to weak economic conditions and reduced consumer spending.

Foreign demand also reduced at the start of the year, linked to worsening global demand and shipping disruption.

The Durban port crisis made further headwinds on the supply side, as delays to the processing of shipping containers resulted in a lengthening of delivery time, with the second-fastest deterioration in supplier performance in nearly two years.

On the price front, input prices rose at the slowest rate since December 2020, and selling prices increased only marginally compared to last month.

The survey showed that employment fell only fractionally and at the slowest pace for three months.

Looking ahead, South African businesses were strongly upbeat about activity and demand over the next year amid hopes of an improvement in economic conditions that could help drive company expansion.

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