South Africa Manufacturing Sector Weakens

The South African manufacturing sector faces numerous challenges, contributing to its recent decline. Stats SA reported a 1.4% decrease in manufacturing production in December 2025 compared to the previous year. This contraction was broad-based, with significant negative contributions from sectors like food and beverages (-4.6%) and wood and paper products (-5.2%). However, the petroleum, chemical products, rubber and plastic products division showed a positive contribution (7.5%).

Investec economist Lara Hodes noted that eight out of ten manufacturing sub-sectors contracted year-on-year in December. FNB senior economist Thanda Sithole highlighted that total manufacturing output contracted by 1.3% in 2025, reflecting a downturn across most divisions, except for textiles, clothing, leather, and footwear.

The sector’s struggles are also reflected in the Purchasing Managers’ Index (PMI), which fell to 40.5 at the end of 2025, indicating challenging conditions. Despite these challenges, sentiment among manufacturers improved slightly in the fourth quarter of 2025, according to the BER’s manufacturing survey.

Looking ahead, there is an expectation of a modest rebound in manufacturing production in 2026, supported by improvements in domestic demand, easing infrastructure constraints, and a stable global growth environment.

Declines were largely due to decreases in food and beverage production, wood and paper products, and basic iron and steel production.

Economists expect a modest rebound, supported by improved domestic demand and easing infrastructure constraints.

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