South Africa’s Manufacturing Sector Faces Headwinds Despite March Uptick
According to the latest data released by Statistics South Africa (Stats SA), manufacturing output rose 0.9 % year‑on‑year in March 2026. The modest gain followed a 2.3 % contraction in February and left the sector still struggling to recover from a broader quarterly slump.
Quarterly Performance
In the first three months of 2026, manufacturing fell 1.0 % compared with the same period in 2025. Although the industry accounts for roughly 13 % of gross domestic product (GDP), the decline was enough to trim overall economic growth in the quarter.
Five of the ten manufacturing divisions reported lower production volumes. The biggest drags came from:
- Petroleum, chemical products, rubber and plastic products
- Lumber, paper, printing and publishing
- Iron and steel
- Non‑ferrous metals and machinery
- Communications and professional equipment
Food and beverages was the sole division that posted positive momentum in March, driving the monthly uptick.
Monthly Trends
On a seasonally adjusted basis, factory production increased 0.8 % month‑over‑month in March. This marked the fourth consecutive month of year‑on‑year decline, underscoring the fragility of the recovery.
Drivers Behind the March Rise
The rebound in food and beverages output was primarily linked to stronger domestic demand and a temporary easing of supply chain bottlenecks. However, analysts caution that the improvement may be short‑lived.
Near‑Term Outlook
Geopolitical tensions in the Middle East continue to push fuel prices higher, raising production costs for energy‑intensive manufacturers. FNB economist Thanda Sithole noted:
“We expect the sector to remain under pressure in the near term due to ongoing turmoil in the Middle East and rising energy‑related production and freight transport costs.”
FNB’s estimates show that manufacturing output has slipped 0.5 % year‑to‑date compared with the corresponding period in 2025.
PMI Signals Mixed Messages
The Absa‑sponsored Manufacturing Purchasing Managers’ Index (PMI) unexpectedly rebounded to 52.6 in April 2026, moving back into expansionary territory for the first time since September 2025. Investec economist Lara Hodes warned that the rise likely reflects:
- Forward buying of goods ahead of anticipated price increases
- Higher crude oil prices, which have breached the $100‑per‑barrel mark
- Persistent supply chain disruptions
Moreover, the forward‑looking component of the PMI — measuring expected business conditions six months ahead — remained in contractionary territory after shedding 22.9 points in March, suggesting limited confidence in a sustained recovery.
Broader Economic Impact
Declines in manufacturing, together with weaker performance in electricity, gas and water, and construction, were the primary contributors to South Africa’s subdued GDP growth in 2025. The economy expanded by just 1.1 % last year, falling short of the Treasury’s 1.4 % forecast.
While the March uptick offers a glimmer of hope, the combination of elevated energy costs, geopolitical uncertainty, and cautious business sentiment points to a challenging path ahead for the nation’s manufacturing sector.
