SA’s manufacturing sector suffered a sharp setback in April, with the Absa purchasing managers’ index (PMI) falling four points to 44.7, dashing hopes of a recovery after March’s improvement.
The result came in well below forecasts from Investec economist Lara Hodes, who expected the PMI to edge up to 49.4.
“Worryingly, the index tracking expected business conditions in six months’ time decreased further. The index was down by 9.4 points to 48.6 in April, edging below 50 points for the first time since the 41 points in November 2023,” the latest statement, released by the Bureau for Economic Research (BER) on Friday read.
“The return of load-shedding, global tariff developments and local political uncertainty because of the VAT saga and open disagreements within the government likely weighed on sentiment.”
The data showed a steep decline in both business activity and new sales orders, which dropped by 8.3 and 12.8 points, respectively. Domestic and export demand both softened, with the index tracking export sales returning to contractionary levels.
“The respondents’ commentary was decidedly more negative in April ... beyond politics, excessive rains caused problems for some producers,” the BER said.
“Meanwhile, despite weak demand, the supplier deliveries index increased by 2.5 points to 56.6 points.”
Since this index is inverted, the BER said the increase suggests delivery times have lengthened, meaning goods are taking longer to arrive.
“Indeed, given the slowdown in activity and fewer orders being processed, this suggests increased bottlenecks in the supply chain processes, causing delays that struggle to improve in a low-demand environment.”
While the employment index declined to 42.9, inventories ticked up slightly as some firms stockpiled materials amid tariff uncertainty.
Meanwhile, input cost pressures intensified, with the purchasing price index climbing to 68.3 despite local fuel price cuts.
“Although fuel prices declined during the month, imported material costs picked up markedly, underpinned by the weak rand, which reached close to R20/$ earlier in [April],” Hodes said in response to the latest print.
“The manufacturing sector appears to have recorded a poor start to the second quarter after having averaged 46.2 in the first quarter of 2025, which was lower than the fourth quarter 2024 reading of 49.0,” Oxford Economics senior economist Jee-A van der Linde said.
“Considering SA’s uncertain political environment, combined with the backdrop of building global headwinds, the outlook for the SA economy has deteriorated,” he said.
“Real GDP growth for 2025 has been revised down to 1.0% from 1.5% previously due to expectations of reduced merchandise trade and lower private sector investment in the near term.”
Hodes said it was worrying that the employment index fell further into contractionary territory in April.
“It has been in negative territory (below 50) for 13 consecutive months. GDP growth has been lacklustre, with a lift in sentiment and accordingly, investment and growth needed to drive a sustainable increase in employment,” she said.
Update: May 2 2025
This story has been updated with comments by economists.
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