One of South Africa’s most critical sectors disappoints

Manufacturing data for March 2025 undershot market expectations, contracting by 0.8% year-on-year following February’s 3.2% y/y slump.

Measured on a quarter-on-quarter seasonally adjusted basis, manufacturing output fell by 2.3% in the first quarter of the year3which means it will be detracting from the quarter’s GDP reading.

According to Stats SA, seasonally adjusted manufacturing production decreased by 2.2% in March 2025 compared with February 2025.

This followed month-on-month changes of 0.7% in February 2025 and 0.0% in January 2025.

Seven of the ten manufacturing divisions reported negative growth rates over this period. The largest negative contributions were reported for the following divisions:

• Petroleum, chemical products, rubber and plastic products (-3.9% and contributing -0.8 of a percentage point);
• Food and beverages (-2.4% and contributing -0.6 of a percentage point); and
• Motor vehicles, parts and accessories and other transport equipment (-7.0% and contributing -0.5 of a percentage point).

Similar results were seen in manufacturing sales, which also decreased by 0.2% in March compared with February 2025.

This followed month-on-month changes of 0.2% in February 2025 and -1.0% in January 2025.

According to Investec economist Lara Hodes, the manufacturing sector’s lacklustre outcome is in line with the performance of the Absa Purchasing Managers Index.

Specifically, the PMI index remained in contractionary territory in March, with the business activity and new sales orders’ indices still subdued.

She noted that the index measuring anticipated business conditions — looking at expectations in six months’ time) moved into contractionary territory in April for the first time since November 2023.

According to the Bureau for Economic Research, “respondents’ commentary was decidedly more negative in April”, with heightened uncertainty caused by the trade war as well as “local developments”, weighing on sentiment.

“Worryingly, advance indications provided by April’s PMI release show that conditions worsened at the beginning of the second quarter with both the business activity index and new sales orders’ indices falling further into contractionary terrain, underpinned by a slump in both demand conditions domestically and export sales,” Hodes said.