Private sector business conditions in South Africa shrunk for the third consecutive month in June, as both output and new orders declined again, survey figures from HSBC and Markit Economics showed Thursday.
The headline purchasing managers' index fell to 49.5 in June from 49.7 in May. Any reading below 50 indicates contraction in the sector. The latest figure reflects further declines in both output and new orders, while the rate of contraction accelerated slightly since the previous month.
In June, there was broad-based decline in total new orders, with new export business also declining on the previous month. Due to increased competition, the rate of decline of foreign demand reached the sharpest level in nearly two years. Employment grew for the fifth successive month.
Both input and output prices increased at steeper rate in June. Higher purchasing prices resulted in the rise of overall input prices during the month. Staff costs logged the weakest increase in the survey history.
"Following several months of moderating price pressures, inflation in input and output prices re-accelerated during June, suggesting that consumer and producer price pressures will remain elevated and continue to influence monetary policy decisions by the Reserve Bank," David Faulkner, Economist at HSBC, said.
