SA’s economy could remain in the doldrums, survey shows
The Standard Bank PMI remained in contractionary territory for a third consecutive month
Private-sector activity has remained subdued, indicating that the economy remained weak in the third quarter.
The Standard Bank purchasing managers index (PMI) released on Wednesday showed that domestic business conditions improved slightly in September to 48 after dropping to a 29-month low of 47.2 in August.
The index looks at the whole economy and a score below 50 and indicates a contraction in business conditions. This is the third consecutive month of deterioration.
The PMI decline was broad-based as new orders, output, employment and inventories fell further. However, Standard Bank said the index was likely to improve as President Cyril Ramaphosa’s economic stimulus plan took hold.
“The recent improvements in the Mining Charter together with President Ramaphosa’s economic stimulus plan — which includes, among others, plans to reduce cost of doing business — should boost business confidence and investment and economic growth over the medium term,” Standard Bank economist Thanda Sithole said.
The Absa PMI, which measures sentiment in the manufacturing sector, also pointed to a weak economy in the third quarter. The index dipped to its lowest level in just over a year, slipping to 43.2 points in September from 43.4 in August.
This comes after the shock second-quarter GDP figures, which indicated that SA had entered a recession. The data this week has indicated that SA will continue to falter in the third quarter.