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South Africa Private Sector Contracts At Record Pace

South Africa's private sector contracted the most on record in May as lockdown measures to control the spread of coronavirus, Covid-19, were extended, survey data from IHS Markit showed on Wednesday.

The headline Purchasing Managers' Index fell to 32.5 in May from 35.1 in April. Any reading below 50 indicates contraction in the sector. This was the third consecutive decline.

Output levels contracted sharply in May and incoming new business declined at a marked pace, as firms were unable to receive orders and new work from abroad.

Backlogs of work eased in May and employment dropped for the seventh month in a row. Suppliers' delivery time lengthened due to restrictions on movement.

On the price front, purchase cost declined in May and output prices were reduced.

The 12-month outlook for the business activity turned negative for the first time in May.

"It is now expected that the economy will suffer an unprecedented fall in GDP during the second quarter," David Owen, an economist at IHS Markit, said.

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