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South African private sector activity contracted in March as stronger price pressures and drought conditions affected customer demand, a survey showed on Thursday.
The S&P Global South Africa Purchasing Managers' Index (PMI) fell to 48.4 in March from 50.8 in February. A reading above 50 shows growth.
Customer orders slowed in the month while price pressures sped up, which contributed to higher supplier charges and fuel costs, recurring power cuts, drought conditions and wider economic uncertainty, S&P said, citing surveyed firms.
"The pull-back in sales and creeping up of price pressures suggests that businesses still face a tricky economic environment," said David Owen, senior economist at S&P Global Market Intelligence.
"Concerns grow that the water crisis could widen in the coming months and impact business activity further," Owen said, referring to frequent bouts of water outages, which have affected several suburbs in Johannesburg. (Reporting by Bhargav Acharya; Editing by Hugh Lawson)