South African firms faced a sharp slowdown in August as both domestic demand and export activity weakened, highlighting the early effects of U.S. trade tariffs on the economy, Bloomberg reported.

Absa Group Ltd.’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, dropped to 49.5 last month, retreating below the 50 threshold that separates expansion from contraction. The reading reversed July’s 50.8, which had marked the first expansion in nine months.

New sales orders suffered the steepest decline, falling to 47.4 from 55.9, while overall business activity fell to 45.8 from 47.1. Supplier deliveries also eased to 53 from 56.4, reflecting slower incoming demand.

“Both domestic and global demand remain under pressure,” Absa said. “Respondents refer to tariffs hurting exports, even if they themselves are not directly impacted, with some noting knock-on effects on affected clients.”

The slowdown coincides with the U.S. imposing a 30% tariff on most South African imports on August 8, 2025, the steepest such measure in Sub-Saharan Africa. The tariffs threaten an estimated 30,000 jobs, particularly in agriculture and automotive industries, although certain exports such as platinum and pharmaceuticals are exempt.