JOHANNESBURG - South Africa’s manufacturing sector remains in a prolonged slump, with the latest data from Statistics South Africa showing the second consecutive monthly decline in August. This reflects both cyclical pressures and deep-rooted structural challenges in the sector.
According to Lara Hodes, economist at Investec, the August outcome was weaker than consensus expectations.
“Manufacturing production fell by a further 1.5% year-on-year in August, following July’s 1.3% decline,” she says.
“A breakdown of the data shows that four of the 10 manufacturing sub-sectors declined, with the basic iron and steel sector largely responsible.”
This basic iron and steel division, which accounts for nearly 21% of the manufacturing basket, posted a sharp 5.9% decline, subtracting 1.3 percentage points from the overall output.
Hodes noted this was primarily driven by a dramatic 38.3% plunge in the production of basic iron and steel products.
The food and beverages component, which makes up 22.1% of the sector, contracted by 3%, shaving a further 0.7 percentage points off the headline figure.
Other sectors such as wood products, textiles and printing also recorded weak performances, underlining the broad-based nature of the downturn.
Crystal Huntley, economist at Nedbank, echoed these concerns: “The figures suggest that the sector remains under pressure. The largest negative contributions came from beverages, other food products, and special-purpose machinery, which together subtracted around 1.3 percentage points from overall output.”
However, Huntley pointed to some tentative signs of short-term stabilisation.
“On a month-on-month basis, manufacturing production grew 0.4% in August, a better outcome than the contractions of 0.8% in July and 0.1% in June,” she said.
This modest growth helped push the three-month moving average (June to August) to a 1.5% quarter-on-quarter increase, suggesting some resilience in parts of the sector. Still, the year-to-date picture remains weak, with the industry contracting 1.8% compared with the same period in 2024.
Structural headwinds remain
The sector continues to face major structural hurdles: unreliable electricity supply, high logistics and input costs, tepid local demand and stagnant investment. Some sub-sectors within heavy industry have experienced year-on-year declines exceeding 30%, indicating deeper issues beyond cyclical trends.
As manufacturing remains central to South Africa’s industrial and employment base, economists warn that without targeted policy support, including infrastructure upgrades, energy reliability, and investment incentives, the sector’s long-term decline may accelerate.