Activity in South Africa’s private sector deteriorated slightly in January as output and new orders fell while exports rose, a survey showed on Tuesday.
IHS Markit’s Purchasing Managers’ Index (PMI) rose to 49.6 from 49.0 in December, remaining below the 50 mark that separates expansion from contraction for the seventh month in a row.
The first increase in export orders since September 2017 helped arrest the rate of decline in business conditions, with demand for agricultural products in particular growing strongly.
“This points towards a modest recovery in the private sector during 2019, as indicated by IHS Markit’s forecast of 1.4 percent annual GDP growth,” said IHS Markit economist David Owen.
While firms said overall demand in the first month of the year was subdued, they were upbeat about future demand and output, citing ongoing political reforms as a likely boost to the economy and consumer activity.
Africa’s most industrialised economy grew 2.2 percent in the third quarter of 2018 after contracting in the preceding two quarters, and has seen sentiment brighten since Cyril Ramaphosa became president last February. He has promised to tackle corruption and reform economic policy.
Last month, the central bank forecast economic growth of 1.7 percent for 2019.