IHS Markit Purchasing Managers' Index: private sector activity deterioration slowing

SA private sector business activity's deterioration eases as expectations improve for 2019.

On Friday, the latest IHS Markit Purchasing Managers’ Index (PMI) was released, stating that December marked the sixth consecutive month of South Africa’s private sector business activity worsening. 

However, the report stated that the rate of South African firms’ purchasing activity decrease was slower than in November. 

The IHS Markit South African PMI, which reflects local private sector business performance and is based on indicators for new orders, employment, suppliers’ delivery times and stocks of purchases, rose from 48.2 in November to 49 in December 2018. 

The rise wasn’t enough, however, to reach the neutral 50-point mark, which would mean improvement. The 49, though higher than November, still indicates deterioration. 

However, there is cause for optimism. David Owen, IHS Markit economist, said that South African business confidence levels had reached an eight-month high in December, with firms expecting 2019 to be a more positive year for the country. 

"It is hoped that economic reforms will prevent another dip in output next year, although the summer's elections may add extra uncertainty," he said.