South Africa's private sector expanded for a second straight month in July, though at a slightly slower pace as weaker employment growth and renewed stock drawdowns offset a return to output growth, a business survey showed on Wednesday.

The S&P Global South Africa Purchasing Managers' Index (PMI) fell to 50.3 in July from 50.5 in June, a survey by S&P Global showed.

The 50-mark separates growth from contraction.

Employment growth slowed sharply to a six-month low despite a first increase in backlogs of work since September. Supply chains remained stretched, with vendor delivery times lengthening for a seventh month, though the deterioration was the softest since February.

New orders contracted for a third consecutive month as cautious consumer spending, protests and clients switching to cheaper imports weighed on sales. Export demand provided some support, rising for a second straight month, though less strongly than in June.

However, the survey noted that South African businesses enjoyed more breathing room in July, following the cost squeeze over the second quarter, as a drop in fuel prices helped to lower the rate of input price inflation and reduce second-round wage effects.

"This supported a modest revival of business activity, although sales continued to be hampered by client caution and a difficult trading environment," said David Owen, Principal Economist at S&P Global Market Intelligence.

Output rose for the first time in three months, ending a two-month run of contraction, although the increase was only marginal.