Financial services firm Absa’s Purchasing Managers’ Index (PMI) decreased by four points to 44.7 in April, with the headline PMI remaining in contractionary territory for a sixth consecutive month.

Respondents' commentary was decidedly more negative in April and comments suggested that demand was weak amid the uncertainty created by the global tariffs saga and local developments.

Further, excessive rains caused problems for some producers.

The overall index was down by 9.4 points to 48.6 in April, edging below 50 points for the first time since November 2023.

The return of loadshedding, global tariff developments and local political uncertainty because of the proposed value-added tax increases and open disagreements within the Government of National Unity likely weighed on sentiment, the bank said on May 2.

Further, in response to struggling demand, the business activity index decreased by 8.3 points to 40 in April. The economy is already in a slow-growth environment and increased political uncertainty, tariffs and energy supply issues are weighing on manufacturing activity.

New sales orders declined by 12.8 points to 36.1 points in April, with domestic demand and export sales decreasing.

The index tracking export sales returned to contractionary levels. Both domestic and export demand are struggling and trade policy uncertainty and tariffs have added to the problem of an already export-constrained environment, Absa noted.

Despite weak demand, the supplier deliveries index increased by 2.5 points to 56.6 points. This index is inverted, which suggests that delivery times have lengthened, meaning they have become slower.

Given the slowdown in activity and fewer orders being processed, it seems that increased bottlenecks in the supply chain processes are causing delays that struggle to improve in a low-demand environment.

Meanwhile, the employment index decreased by 3.2 points to 42.9 and remained in contractionary territory for a thirteenth consecutive month. Sluggish demand, uncertainty and competition from imports have caused production declines for local manufacturers, leading to staff layoffs to match current production levels, Absa said.

Manufacturers keep scaling down production because demand has not improved.

Additionally, the inventories index ticked up slightly to 47.8 in April from 45.9 in March, as some manufacturers reported stocking up on materials amid uncertainty around tariffs, it noted.

Further, the purchasing price index increased by 3.8 points to 68.3 in April, despite fuel price cuts at the start of the month.

Other input material costs were higher owing to a relatively weaker rand exchange rate, especially for the first two weeks of April.

The cost of imported materials increased significantly in the first two weeks of April as the rand exchange rate weakened and remained above R19 to the dollar, but it has since strengthened to below R19 to the dollar, Absa said.