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South African private sector activity held steady in September as firms scaled back output somewhat due to rolling power cuts and cost pressures but took on more staff, a survey showed on Wednesday.
The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 49.9 in September from 51 in August, slipping just below the 50-point line that denotes growth in activity.
Output contracted as the country continued to face its worst power cuts on record, the survey showed, adding however that employment rose for the second straight month.
Lower levels of blackouts forecast by state-owned utility Eskom for the southern hemisphere’s summer season give hope that businesses will be able to rebuild activity, said David Owen, economist at S&P Global Market Intelligence.
In September, Eskom said that plant outages will not exceed 14 500 MW – a third of its capacity but less than the 16 500 MW seen in winter and summer of last year.
“That said, PMI data suggest that cost pressures are still severe, with fuel and import prices particularly taking their toll,” Owen said.
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