South African private sector activity remained stable in September as companies reduced production somewhat due to power cuts and cost pressures but hired more staff, according to a survey released on Wednesday .
South Africa’s S&P Global 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 the worst power cuts on record, the survey showed, although it added that employment increased for the second consecutive month.
Falling outage levels predicted by state utility Eskom for the southern hemisphere summer season provide hope that businesses will be able to rebuild operations, said David Oweneconomist at S&P Global Market Intelligence.
In September, Eskom said plant outages would not exceed 14,500 MW – a third of its capacity but less than the 16,500 MW recorded in winter and summer last year.
“That said, PMI data suggests that cost pressures remain severe, with fuel and import prices particularly detrimental,” Owen said.