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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
July 15, 2025

Manufacturing Production

May 2025

In May 2025, South Africa’s manufacturing output saw a slight increase of 0.5%, rebounding from a 6.4% decline in April. This surpassed most analysts’ expectations, who had predicted a 3.0% contraction. However, the Purchasing Managers’ Index (PMI) decreased further, dropping from 44.7 in April to 43.1 in May, indicating growing concerns among manufacturers.

The Iron, Steel, Metals, and Machinery sector played a significant role in the 0.5% growth, expanding by 4.3% and adding 0.9 percentage points to the overall increase. Conversely, the motor vehicles, parts, and accessories division shrank by 6.7%, reducing the growth by 0.6 percentage points.

Seasonally adjusted sales rose by 0.8% in May. Nonetheless, the quarter ending in May showed a slight decline of 0.3% compared to the previous quarter. This dip was mainly due to a 3.0% reduction in the food and beverages sector, though this was partially offset by a 7.9% increase in the Motor Vehicles and Parts sector.

Manufacturing is crucial to South Africa’s economy, employing about 1.6 million people and contributing 12.5% to the GDP in 2024. Employment saw a slight rise from 1.675 million in Q4 2024 to 1.677 million in Q1 2025, suggesting a cautiously optimistic outlook with May 2025’s production growth.

Business owners remain cautious, adopting a “wait-and-see” approach as concerns grow over US tariffs on exports and ongoing US–China trade tensions. This caution is expected to deepen with the introduction of a 30% tariff on South African goods entering the US market from August 1, 2025. Nevertheless, companies continue to hold substantial cash reserves, reflecting a prudent stance amid mounting domestic and global economic pressures over the short to medium term.

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More Coverage

Manufacturing Production

November 2025
In November, South Africa’s manufacturing output experienced a further decline of 1.0%, following a modest increase of 0.4% in October. This downturn was slightly better than market expectations, which had forecasted a decrease of 1.2% for November. The Purchasing Managers’ Index (PMI) also fell by 7.2 points, from 49.2 in October to 42.0 in November 2025, indicating a less favourable business climate anticipated by manufacturers.

Gold and Foreign Exchange

December 2025
The South African International Liquidity Position, as reflected by Net Gold and Foreign Exchange Reserves, saw an increase in US Dollar terms for December 2025, although there was a slight decline when measured in Rand. This occurred alongside the Rand’s appreciation against the US Dollar from November to December, according to data from the South African Reserve Bank.

A Case for Lowering Interest Rates

by the South African Reserve Bank
As the South African Reserve Bank (SARB) gears up for its next Monetary Policy Committee (MPC) meeting on January 29, 2026, the prospect of a 25-basis point reduction in the repo rate, bringing it down from 6.75% to 6.5%, appears increasingly likely. The dynamics surrounding this decision have shifted significantly since the last MPC meeting in late November 2025, driven by a confluence of international events and local economic performance.

Producer Price Inflation

November 2025
In November 2025, producer price inflation increased to 2.9%, reflecting the same growth rate as the previous month. However, there was no change on a monthly basis compared to October.

Mining Production and Sales

October 2025
In October 2025, mining activity in South Africa saw a year-on-year increase of 5.8%, following a 1.4% rise recorded in September.
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