A 0.9% year-on-year expansion in manufacturing output in March was not enough to avert a contraction during the first quarter of the year, which is likely to be a damper on economic growth for the period.
The sector — the fourth-largest contributor to GDP, accounting for about 13% — fell 1% in the first three months of the year compared with the same period in 2025, Stats SA said.
Five of the 10 divisions reported lower production levels, led by petroleum, chemical products, rubber and plastic products. Other declines in the quarter included wood, paper, printing and publishing, iron and steel, nonferrous metals and machinery, communication and professional equipment, and food and beverages.
The 0.9% annual growth for March, after the sector shrank by 2.3% in February, was driven primarily by food and beverages. On a month-on-month basis, seasonally adjusted factory output rose 0.8% during the month. The March expansion snapped four straight readings showing year-on-year contraction in output.
The near-term outlook for the sector is bleak, with turmoil in the Middle East set to keep fuel-related production costs elevated.
Banking group FNB’s estimates show that manufacturing output is down 0.5% so far this year versus the corresponding period in 2025. “We expect the sector to remain under pressure in the near term amid ongoing Middle East turmoil and rising energy-related production and freight transport costs,” FNB economist Thanda Sithole said.
An improvement in the latest manufacturing purchasing managers’ index (PMI) for April, sponsored by Absa, points to output growth being sustained during that month.
The index unexpectedly rebounded to 52.6 in April, returning to expansionary territory for the first time since September 2025, a report last week showed.
But this likely reflected the front-loading of orders ahead of anticipated price pressure from the Middle East war, Investec economist Lara Hodes said on Tuesday.
“Indeed, oil prices have surged to over $100 a barrel, adding upside inflationary pressure, weighing on manufacturers’ profitability, while supply chain disruptions remain a key concern,” she said.
“The index measuring expected business conditions in six months’ time remained in contractionary territory in April, after shedding a marked 22.9 points in March, which does not bode well for future performance of the sector, with geopolitical uncertainty elevated.”
Contractions in the manufacturing, electricity, gas and water, and construction industries were the main drag on GDP in 2025, leading to lacklustre growth of 1.1% against the Treasury’s forecast of 1.4%.
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