South Africa’s Manufacturing Slump Continues as Mining Shows Resilience
Recent data from Statistics South Africa (Stats SA) reveal that the country’s manufacturing sector contracted 2.9 % year‑on‑year in April 2024, following a modest rebound of 1.5 % in March. The decline suggests that the weakness that dragged down first‑quarter GDP growth is likely to persist into the second quarter.
Key Contributors to the Manufacturing Decline
Stats SA highlighted several sub‑sectors that drove the annual drop:
- Iron and steel, non‑ferrous metal products, metal products and machinery – down 6 %
- Wood and wood products, paper, publishing and printing – down 10 %
- Motor vehicles, parts and accessories, and other transportation equipment – down 11 %
Seasonally adjusted factory output fell 2.7 % in April after rising 1.2 % in March, while the three‑month average to April was 1.3 % lower than the preceding three‑month period. Six of the ten production areas recorded negative growth rates during this window.
Mining Sector Offers a Counterbalance
In contrast, mining production rose 8.2 % year‑on‑year in April, buoyed by strong performances in platinum group metals, manganese ore and chrome ore. Coal remained the largest negative contributor within mining.
Seasonally adjusted mining output increased 3.3 % from March to April, and the three‑month average to April was up 2.4 % compared with the prior three months.
Broader Economic Implications
The manufacturing contraction of 0.8 % in the first quarter of 2024, despite a March rebound, weighed on overall GDP growth, which stood at just 0.5 % for Q1 2024 according to Stats SA. Five of the ten manufacturing sectors experienced declines, with petroleum, chemical products, rubber and plastics, base iron and steel, non‑ferrous metals, metal products and machinery, wood and wood products, and paper as well as publishing and printing being the most significant drags.
Analysts from Absa, Andiswa Nondudule and Sello Sekele, noted that the sector’s current struggles are unlikely to reverse quickly:
“Having subtracted from GDP growth in Q1 2026, we believe manufacturing is unlikely to make a significant contribution to growth in the coming quarters.”
They argue that a meaningful recovery will require:
- Stable energy prices
- Improved logistics infrastructure
- More supportive government policies
- A more favorable global trade environment
Structural Challenges and Policy Responses
South Africa’s revised industrial development strategy, released earlier this week, points out that the gradual deindustrialisation since democracy in 1994 has cut manufacturing’s share of GDP from roughly 23 % to about 13 %.
The strategy calls for preferential electricity tariffs for energy‑intensive industries—including mining, manufacturing and smelting—to lower input costs. It also emphasizes the need to address rising fuel prices, which have been exacerbated by geopolitical tensions such as the US‑Iran situation that disrupts global oil supplies.
Outlook
While mining shows signs of resilience, the manufacturing sector faces headwinds that could continue to suppress industrial output unless the recommended policy measures are implemented effectively. Stakeholders—including policymakers, industry leaders, and investors—will need to monitor energy cost trends, logistics bottlenecks, and global demand shifts closely to gauge the timing and strength of any potential recovery.
