South Africa’s Manufacturing Sector Contracts Further in March 2025

Key Manufacturing Indicators Show Continued Decline

The South African manufacturing sector continued its downward trend in March 2025, contracting by 0.8% year-on-year following February’s 3.2% slump. This disappointing performance fell short of market expectations and signals ongoing challenges for one of the country’s most critical economic sectors.

Quarterly Performance Raises GDP Concerns

On a quarter-on-quarter seasonally adjusted basis, manufacturing output declined by 2.3% in Q1 2025. This contraction suggests the sector will negatively impact South Africa’s first-quarter GDP figures when they are released.

Stats SA reported that seasonally adjusted manufacturing production decreased by 2.2% in March compared to February, following month-on-month changes of 0.7% in February and 0.0% in January.

Sector-Wide Weakness Across Key Industries

Seven of the ten major manufacturing divisions reported negative growth rates during this period. The worst-performing sectors included:

• Petroleum, chemical products, rubber and plastic products (-3.9%, contributing -0.8 percentage points)
• Food and beverages (-2.4%, contributing -0.6 percentage points)
• Motor vehicles, parts and accessories (-7.0%, contributing -0.5 percentage points)

Manufacturing Sales Also Decline

The negative trend extended to manufacturing sales, which decreased by 0.2% in March compared to February. This followed month-on-month changes of 0.2% in February and -1.0% in January.

Economic Indicators Paint Bleak Picture

Investec economist Lara Hodes noted the sector’s poor performance aligns with the Absa Purchasing Managers Index (PMI), which remained in contractionary territory in March. Both business activity and new sales orders indices showed continued weakness.

More concerning, the index measuring anticipated business conditions moved into contractionary territory in April for the first time since November 2023. The Bureau for Economic Research reported significantly more negative sentiment among respondents, citing trade war uncertainties and local developments as key concerns.

“April’s PMI data shows conditions worsened at the start of Q2, with both domestic and export demand slumping,” Hodes warned, indicating the sector’s challenges may persist in coming months.

Source: BusinessTech