SA’s factory sector, which accounts for about 13% of GDP, contracted again in August, coming in weaker than forecasts.
Stats SA data released on Thursday showed factory production fell 1.5% year on year, deepening July’s revised 0.7% decline and reversing the gains recorded in June.
The largest drags came from the basic iron and steel, non-ferrous metals, metal products and machinery division, which fell 5.9% and shaved 1.3 percentage points off total output, and the food and beverages division, which declined 3% and cut 0.7 of a percentage point.
On a seasonally adjusted basis, production increased 0.4% month on month in August after a 0.8% decline in July.
Over the three months to end-August, factory output rose 1.5% compared with the previous three months, supported by gains in six of the 10 manufacturing divisions. The main positive contributions came from food and beverages (3.1%), petroleum, chemicals, rubber and plastics (2.6%), and motor vehicles and transport equipment (5.2%).
Factory sales showed a similar pattern, rising 0.6% month on month in August after falling 0.6% in July. In the three months to August, sales increased 3%, led by food and beverages, petroleum and chemicals, and motor vehicles.
The latest figures reinforce concerns the manufacturing sector is struggling to regain traction. The Absa purchasing managers’ index (PMI) slipped back into contraction in August, falling to 49.5 after briefly crossing above the 50-point neutral mark in July.
The RMB/BER business confidence index (BCI) declined to 39, remaining below its long-term average of 42, indicating that more than 60% of businesses are dissatisfied with conditions.
“Advance indications provided by September’s PMI release show that while activity picked up at the end of the third quarter, expectations about future business conditions (in six months’ time) fell markedly, which does not bode well for activity going forward, with the full effect of the US tariffs not yet felt,” Investec economist Lara Hodes said.
“This is in line with the BER’s [third-quarter] manufacturing survey results, which show that confidence among respondents slipped in the third quarter.”
According to the BER, the index measuring sentiment “edged significantly below the long-term average”.
Update October 9 2025 This story has been updated with comment.
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