A gauge measuring South African manufacturer sentiment rose in April to its best level in two years, driven by business activity and new sales orders, potentially reflecting front-loading ahead of price increases due to the Iran war.
Absa Group Ltd.’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, advanced to 52.6 from 49 in March, the Johannesburg-based lender said in an emailed statement on Monday.
It was the first reading above 50 — the threshold separating an expansion from contraction — since September 2025.
The business activity index rose for a second consecutive month to 52.8, from 46.1, while orders for new sales increased to 52.9, from 44.5.
The reading suggests that production picked up meaningfully, the lender said.
“The increase appears to have been driven primarily by stronger domestic demand, while export sales declined,” Absa said, suggesting that the recovery was not broad-based and remains vulnerable to external headwinds.
“Moreover, some respondents indicated that orders may have been brought forward in anticipation of further cost increases, potentially resulting in weaker demand in the months ahead,” it said.
Factories in April contended with rising cost pressures, mainly reflecting higher oil-linked input costs, which have soared since the US-Israel war with Iran started on 28 February 2026.
South Africa has announced a fuel levy reduction to cushion businesses and households from the surge in gasoline and diesel prices.
Persistent input-cost inflation could contribute to broader price pressures in the economy, although the fuel levy relief extension does soften the blow, Absa said.
“Elevated input costs are likely to squeeze profit margins and could limit the sustainability of the recent improvement in activity,” the bank said.
“In addition, continued cost pressures at the factory level may contribute to broader inflationary pressures in the economy.”
BLOOMBERG
