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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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South Africa is trapped in severe economic stagnation, facing a projected 1.0% growth rate for 2026, 33.6% unemployment, and sharp contractions in mining (-12.7%) and manufacturing (-4.3%). Exposed to global fuel shocks via depleted reserves and >R12.00/litre pump levies, the nation is also caught in a fiscal spiral where national debt nears 80% of GDP and interest payments exceed R1 billion daily. Escaping this trap requires four urgent structural reforms: halting interest rate hikes for supply-side inflation, replacing rigid B-BBEE quotas with job-creation incentives, scrapping Expropriation Without Compensation (EWC), and deregulating Transnet’s logistics corridors.

Mining Production and Sales for August 2026

South Africa’s mining sector remains a vital source of jobs, foreign exchange and economic growth, but August’s sharp fall in mining output and sales highlights the mounting pressure on the industry. Rising fuel and energy costs, policy uncertainty and growing trade challenges are weighing on producers, even as firm gold prices and temporary US tariff exemptions offer some relief. Read the full report for a closer look at the latest figures, the forces shaping the sector and what they could mean for mining’s future in South Africa.

MACROECONOMIC & INVESTMENT INSIGHTS | OCTOBER 2026

A $100-plus oil price, a weaker rand and record fuel hikes are putting South Africa’s economy under mounting pressure, while strategic reserves offer little protection. This report examines how imported inflation is squeezing households and businesses, why higher interest rates may do little to tackle its root causes, and how sluggish growth and rising debt are tightening the fiscal squeeze. It also explores the stakes for trade with the United States and AGOA, and the policy choices that could restore investor confidence, unlock growth and put the country on a more resilient path.

International Trade and Trade Balance – August 2026

South Africa recorded a trade surplus of R20.4 billion in August 2026, as exports continued to outpace imports. Export growth has exceeded import growth over the first eight months of the year, reflecting subdued domestic demand among businesses and consumers. But with higher fuel prices and tighter monetary policy expected to weigh on spending, demand is likely to recover only gradually. Read the full report for a closer look at the trade figures and what they could mean for South Africa’s economy in the months ahead.

Private Sector Credit Extension (PSCE): August 2026

South Africa’s credit market is showing surprising resilience, with credit demand rising by 7.5% in August 2026 despite renewed interest-rate pressure, elevated inflation and mounting household costs. While mortgage advances continued to grow, the fragile recovery in the property market highlights the strain caused by subdued investment, high debt levels and rising municipal and energy expenses. At the same time, sluggish instalment credit growth and continued reliance on short-term borrowing reveal how consumers are navigating increasingly difficult financial conditions. With higher oil prices, geopolitical risks and further SARB tightening adding to the pressure, this report examines what the latest credit trends reveal about household finances, business confidence and the broader South African economy.