2018.09.0503:45:00UTC+00South Africa PMI At 29-month Low In August

South Africa's private sector contracted at the fastest pace in over two years amid a sharp fall in new work, survey data from IHS Markit showed Wednesday.

The headline Standard Bank South Africa Purchasing Managers' Index fell to a 29-month low of 47.2 from 49.3 in July. A reading below 50 suggests contraction in activity. Output fell at the sharpest pace since March 2016.

The private sector contracted for a second straight month and the downturn was marked, reflecting quicker declines in new business inflows, output and stocks of purchases, the survey found.

The PMI survey data was in sync with the overall economic situation. Official figures showed on Wednesday that the economy entered a recession during the second quarter, the first in nearly a decade.

"The poorly performing PMI reflects economic policy uncertainty, increased cost pressures from elevated oil prices, rand weakness and labor strikes," Thanda Sithole, economist at Standard Bank, said.

"Even our below-consensus real GDP growth of 1.2% for 2018 might now disappoint. Nevertheless, the SARB leading indicator rose further in June, which is hopeful for medium-term growth prospects."

The economist expects real GDP growth of 2.0 percent for 2019.