SA manufacturing extended its losing streak for a third consecutive month in March, which economists say is likely to weigh on first-quarter GDP.
Thursday’s Stats SA publication rounds off data for the sector in the first quarter, which together offer an indication of its likely contribution to the next overall GDP reading. Manufacturing contributes 12%-13% of SA’s GDP.
“Today’s data confirms that the manufacturing sector dragged real GDP growth in the first quarter of 2025,” said FNB senior economist Thanda Sithole.
The data shows production dropped 0.8% year on year, easing from declines of 3.2% in February and 3.3% in January.
Still the March data came in well below expectations, defying forecasts of a recovery.
The main drags were petroleum, chemicals, rubber and plastic products; wood and wood products; paper, publishing, and printing; food and beverages; and electrical machinery, Sithole said.
After recording modest gains in February, seasonally adjusted production fell 2.2% month on month in March.
On a quarterly basis, seasonally adjusted manufacturing production fell 2.3% in the first quarter of 2025, marking the second consecutive quarterly contraction and confirming the sector is entrenched in a downturn.
That “will heavily undermine SA’s GDP growth performance in the [first] quarter”, said Stanlib chief economist Kevin Lings.
“SA manufacturing is currently more than 8% below the level of output achieved prior to the start of Covid [lockdowns] in 2020.”
Manufacturing sales also remained under pressure, declining 0.2% month on month in March after a 0.2% increase in February and a 1% contraction in January.
In quarterly terms, seasonally adjusted sales declined 1.1% in the first quarter of 2025 compared with the fourth quarter of 2024. The main laggards were basic iron and steel, nonferrous metal products, metal products and machinery. These segments were down 3.9%, cutting sales by 0.8 percentage points, while motor vehicles and transport equipment sales contracted 3.2%, subtracting 0.5 percentage points from the total.
Positive contributions came from textiles, clothing, leather and footwear, in which sales were up 4.5%, contributing 0.1 of a percentage point to total manufacturing sales in the first quarter. Wood and wood products, paper, publishing and printing sales rose 3.7%, contributing 0.2 of a percentage point.
“A competitive and successful manufacturing sector requires a combination of factors including supportive infrastructure (such as electricity and rail or port capacity), appropriate regulation, a stable and productive workforce, innovative and dynamic management, an appropriate balance between the use of technology and labour intensity, access to finance, and continued growth in final demand. Unfortunately, many of these factors remain underwhelming in SA,” Lings said.
The decline follows a marked improvement in the Absa purchasing managers index (PMI) in March, which rose four points to 48.7 — the highest since the 52.6 points in October.
Still PMI remains below the neutral 50-point threshold, marking the fifth consecutive month of contraction, the Bureau for Economic Research and Absa reported last month.
“Worryingly, advance indications provided by April’s PMI release show that conditions worsened at the beginning of the second quarter. Both the business activity index and new sales orders’ indices fell further into contractionary terrain, underpinned by a slump in demand conditions domestically and export sales,” said Investec economist Lara Hodes.
“Moreover, the index measuring anticipated business conditions (in six months) moved into contractionary territory in April for the first time since November 2023.”
Update: May 8 2025 This story contains comment from economists.
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