A new survey shows output at SA factories increased meaningfully in April.
A gauge measuring South African producer sentiment reached its best level in two years in April, driven by business activity and new sales orders, potentially reflecting front-loading ahead of a price rise due to the Iran war.
Absa's purchasing managers' index, compiled by the Bureau for Economic Research, rose 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 boundary separating expansion from contraction – since September 2025.
The business activity index rose for the second consecutive month to 52.8 from 46.1, while new sales orders rose to 52.9 from 44.5.
The lender said, the reading shows a meaningful increase in production.
“The growth appears to have been driven mainly by strong domestic demand, while export sales declined,” Absa said. He suggested that the reform was not broad-based and remained vulnerable to external adversities.
“In addition, some respondents indicated that orders may have been brought forward in anticipation of further cost increases, potentially resulting in weaker demand in the coming months,” it said.
Factories grappled with rising cost pressures in April, mainly reflecting higher oil-related input costs, which have increased since the start of the US-Israeli war with Iran on February 28. South Africa has announced a cut in fuel levy to provide relief to businesses and households from rising petrol and diesel prices.
Absa said persistent input-cost inflation could contribute to economy-wide price pressures, although the fuel levy relief extension softens the blow.
“Increased input costs are likely to weigh on profit margins and limit the sustainability of the recent recovery in activity,” the bank said. “Furthermore, sustained cost pressures at the factory level could contribute to economy-wide inflationary pressures.”