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South Africa Private Sector Contracts At Slower Pace

South Africa private sector continued to shrink in January but the pace of contraction slowed from December, survey data from IHS Markit showed Wednesday.

The headline Purchasing Managers' Index rose to 48.3 in January from 47.6 in December. Nonetheless, the sector has remained in decline since May 2019.

The survey showed that output and new orders declined at slower rates in January. Weak capacity pressures led firms to lower employment at the fastest rate in nearly two-and-a-half years.

Cost inflationary pressures accelerated, leading to a solid mark-up in selling charges. Concurrently, business optimism climbed to a seven-month high, data showed.

Following the disruption from severe load shedding in December, South Africa's private sector continued to deteriorate at the start of the year, with output and new orders falling further, David Owen, an economist at IHS Markit, said.

That said, rates of decline eased, signaling that the downturn may have bottomed out, Owen added.

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