PRI­VATE SEC­TOR AC­TIV­ITY RE­MAINS IN CON­TRAC­TION

Pretoria News - - BUSINESS REPORT -

SOUTH African pri­vate sec­tor ac­tiv­ity re­mained in con­trac­tion in Fe­bru­ary as busi­nesses cut jobs due to weak de­mand and ris­ing costs, and the coro­n­avirus out­break in China stalled trade be­tween the two coun­tries, a sur­vey showed yes­ter­day. IHS Markit’s Pur­chas­ing Man­agers’ In­dex edged up marginally to 48.4 points from 48.3 points in Jan­uary, re­main­ing be­low the 50-point level that sep­a­rates ex­pan­sion from con­trac­tion, as the sub-in­dex mea­sur­ing em­ploy­ment fell at a record rate. The un­em­ploy­ment sub-in­dex reg­is­tered a fourth con­sec­u­tive months of con­trac­tion, to 46.7 points in Fe­bru­ary from 48.3 points in Jan­uary. That marked the fastest drop in em­ploy­ment since the read­ing be­gan in its cur­rent form in July 2011. “With new orders fall­ing again and cost in­fla­tion ac­cel­er­at­ing, many South African busi­nesses de­cided to cut into pay­roll num­bers in Fe­bru­ary,” said David Owen, an econ­o­mist at IHS Markit. Owen added that the coro­n­avirus out­break had started to have a notable im­pact on the South African econ­omy, with the shut-down of fac­to­ries in China lead­ing to a steep length­en­ing of in­put de­liv­ery times. “Port con­ges­tion… meant that many busi­nesses were forced to limit ac­tiv­ity, with ex­ports to China also de­creas­ing,” Owen said. The coro­n­avirus out­break was plung­ing the world econ­omy into its worst down­turn since the global fi­nan­cial cri­sis, the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment warned on Mon­day, urg­ing gov­ern­ments and cen­tral banks to fight back to avoid an even steeper slump. On the price front, re­spon­dents said that a weaker rand and de­lays in Chi­nese im­ports of­ten led to in­flated pur­chas­ing costs. “Firms com­mented that slower freight ship­ments and ris­ing port con­ges­tion meant that in­puts of­ten took longer to ar­rive,” IHS Markit said. | Reuters

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