News24 | SA factory mood sours, new orders slump amid Trump tariff war

Absa's purchasing managers' index, compiled by the Bureau for Economic Research, fell to 44.7 in April — its sixth consecutive month in contractionary territory — compared with 48.7 in March. (Pixelprof/GettyImages)

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South African manufacturers turned more gloomy last month, blaming uncertainty fanned by global tariffs and domestic political strains.

Absa's purchasing managers' index, compiled by the Bureau for Economic Research, fell to 44.7 in April — its sixth consecutive month in contractionary territory — compared with 48.7 in March. A number of sub-indexes also recorded declines.

"Worryingly, the index tracking expected business conditions in six months' time decreased further," Absa said in a statement. That gauge fell 9.4 points to 48.6 in April, edging below 50 points for the first time since November 2023.

• New sales orders slumped by 12.8 points to 36.1 points.
• The business activity index decreased 8.3 points to 40.
• The employment index dropped 3.2 points to 42.9, and remained in contractionary territory for the 13th consecutive month.
• The report also noted that the purchasing price index increased by 3.8 points to 68.3 last month, despite cuts in the price of fuel.

Respondents turned "decidedly more negative" in the month, Absa said, citing weak demand due to US President Donald Trump's trade war and doubts over the future of South Africa's governing coalition because of a standoff over a proposed increase in value-added tax.

The VAT saga at one stage looked like it might unravel the so-called government of national unity — whose formation after elections last year stoked investor confidence because of expectations that it would be more business-friendly — but that prospect appears to have been averted.

The Treasury ditched its proposal to raise the VAT rate by half a percentage point this year and next after the Democratic Alliance, the second-largest party in the GNU, took it to court. Finance Minister Enoch Godongwana subsequently announced he would present a new budget on May 21.

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