Picture: BLOOMBERG
Picture: BLOOMBERG

Private-sector activity has slipped to its lowest level in more than two years.

The Standard Bank purchasing managers index (PMI) released on Wednesday showed that domestic business conditions deteriorated further in August as the index dropped to 47.2 index points from 49.3 in July — a 29-month low.

The index looks at the whole economy and a score below 50 and indicates a contraction in business conditions. This is the second consecutive month of deterioration.

The PMI decline was broad-based as new orders, output, employment and inventories fell further. This bodes ill for the economy in the latter half of 2018.

"The poorly performing PMI reflects economic policy uncertainty, increased cost pressures from elevated oil prices, rand weakness and labour strikes. Even our below-consensus real GDP growth of 1.2% for 2018 might now disappoint," Standard Bank economist Thanda Sithole said.

The Absa PMI, which measures sentiment in the manufacturing sector, also pointed to a weakening economy in the second half of 2018. The index dipped to its lowest level in just over a year, slipping from 51.5 points in July to 43.4 in August.

This comes after shock second-quarter GDP figures, which indicate that SA has entered a recession. The data this week has indicated that SA will continue to falter in the third quarter.

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