South Africa’s business activity declines amid port gridlock
Private sector activity in South Africa contracted in December, reflecting a greater impact on businesses due to the port gridlock issues affecting the country's ports, according to a recent survey.
The S&P Global South Africa Purchasing Managers’ Index (PMI) dropped to 49.0 in December, down from 50.0 in November. A reading above 50 indicates growth in activity.
The port crisis in Durban had a significant impact on supply chains, inventories, output, and demand. The survey revealed that delivery times lengthened at the sharpest rate in nearly two years. The challenges in the port infrastructure have contributed to a contraction in private sector activity in South Africa.
Key Takeaways
Rotational power cuts carried out by Eskom, the power utility in South Africa, are anticipated to persist as a problem. These electricity outages reportedly impacted output and sales in December, contributing to ongoing challenges in the sector. In addition, equipment shortages and maintenance backlogs, stemming from years of underinvestment, have posed difficulties for Transnet, the state-owned logistics company in South Africa. This struggle has affected the company's ability to provide sufficient freight rail and port services in the country. The combination of power cuts and logistical challenges highlights the complex issues facing South Africa's energy and infrastructure sectors.
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