Johannesburg – South Africa’s private sector kept shrinking in May as a five-month strike at the country’s platinum mines depressed output and new orders, a business survey showed on Wednesday.
HSBC’s Whole Economy Purchasing Managers’ Index (PMI) rose to 49.7 in May from 49.4 in April as output and new orders, which make up 55% of the index sub-components, stayed below the 50-mark denoting growth for the third straight month.
The Association of Mineworkers and Construction Union (Amcu) is considering a government proposal to resolve the mining strike, which helped push the economy into contraction in the first quarter of the year.
“While the pace of contraction (in the PMI) eased slightly, and new export orders were unchanged, it is apparent that demand will remain stifled without resolution to the mining strike,” said David Faulkner, an economist at HSBC.
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The Government is actually doing everything wrong. The public sector is badly inflated with unnecessary jobs. There is little maintenance of State capital assets. Interest rates are kept low so that consumer debt rises. As there are no local savings, we need more foreign investment; this discouraged by the absence of a State mediation policy for the big employers. It destroys agricultural output with threats of land expropriation. Why does Government persist, knowing all this? Like many other governments, its incumbents want power for five years or ten and to get that they daren’t offend anyone, never mind the long term future.