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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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