SA’s manufacturing sector delivered another disappointing performance in February, with total production contracting 3.2% year on year, according to the latest Stats SA data.
The outcome was worse than the Reuters consensus forecast of a 2.9% drop, but largely in line with the Bloomberg consensus of 3.1%.
The largest drag on production came from two industries: motor vehicles, parts and accessories and other transport equipment decreased 14.9%, cutting 1.3% percentage points from total output; while petroleum, chemical products, rubber and plastic products declined 5.6%, subtracting 1.2 percentage points.
Old Mutual group economist Johann Els noted that vehicle manufacturing accounted for about 9% of the total manufacturing output, while petroleum, chemicals, rubber and plastics contributed about 25%.
The drop, after a 3.3% contraction in January, signals a slower-than-hoped-for recovery in early 2025.
Kevin Lings, chief economist at Stanlib, said the performance of the manufacturing sector was “extremely disappointing” considering the increase in electricity output in the past 12 months. “It was hoped that the scaling back of load-shedding would boost SA’s industrial production,” Lings said.
Investec economist Lara Hodes said the “lacklustre performance” of the manufacturing sector was in line with the movement of the Absa purchasing managers index (PMI).
According to the PMI data released by the Bureau for Economic Research, the index declined 0.6 points to 44.7 in February.
Hodes is hoping for better news next month: “Advance indications provided by March’s PMI release reveal that the overall index lifted somewhat during the month but remained in contractionary territory.”
FNB senior economist Thanda Sithole said that though the 90-day suspension of tariffs announced by US President Donald Trump “offers temporary relief and scope for further negotiations, the baseline 10% duty remains in place”.
The motor industry employs 120,000 people directly and hundreds of thousands indirectly in other industries. It accounts for 50% of African vehicle production, 22% of SA manufacturing output and more than 5% of GDP.
Mikel Mabasa, CEO of industry association Naamsa, said last week that vehicle exports to the US last year were worth R35bn. That made it the local industry’s third-biggest foreign market. In 2023, the combined value of vehicle and components exports to the US was R27.9bn.
Els said locally made cars had come under pressure in terms of consumer demand, amid an “explosion in cheaper Chinese models”, which are mostly imported. “I think that’s a shift currently under way.”
The manufacturing sector is struggling to return to prepandemic levels.
Lings said: “Over the past 12 months SA manufacturing has declined by an annual average of 1.4% and is almost 6% below the level of production achieved prior to the start of Covid back in 2020.”
In seasonally adjusted terms, manufacturing output increased marginally by 0.3% in January and February, after a 0.4% rise in January and a 2.3% contraction in December.
Over the three months to end-February, seasonally adjusted manufacturing production fell 2.3% compared with the previous three-month period.
Among the 10 major manufacturing divisions, five reported declines, led by an 11.4% fall in the motor vehicles and transport equipment segment, a 3.8% decline in petroleum and chemical products, and then a 3.5% contraction in basic iron and steel, nonferrous metals and machinery.
Manufacturing sales inched up 0.1% month on month in February, after a 1% decline in January.
However, over the three months to end-February, sales fell 0.5% compared with the previous three months.
Update: April 10 2025
The article has been updated with reaction and comments from economists.
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