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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
August 12, 2025

Manufactuting Production

June 2025

In June 2025, South Africa’s manufacturing output increased by 1.9%, marginally exceeding market expectations of 1.8% for the month. Notably, the Purchasing Managers’ Index (PMI) saw a significant rise from 43.1 in May to 48.5 in June, suggesting an expected rebound in manufacturing activity for the month.

The food and beverages sector was a key driver of this growth, expanding by 6.0% and contributing 1.4 percentage points to the overall increase. Similarly, the petroleum, chemical, rubber, and plastics division grew by 1.9% year-on-year in June, adding a further 0.4 percentage points to the sector’s total output.

Seasonally adjusted retail sales increased by 2.4% month-on-month in June. For the second quarter ending in June, sales grew by 1.2% quarter-on-quarter. The largest contributor to this growth was the food and beverages division, which expanded by 3.3%, adding 0.8 percentage points. The motor vehicles, parts, and accessories division also saw a notable increase of 5.5%, contributing another 0.8 percentage points to quarterly growth.

Manufacturing remains a vital component of South Africa’s economy, employing approximately 1.6 million people and accounting for 12.5% of GDP in 2024. Employment figures rose slightly from 1.675 million in Q4 2024 to 1.677 million in Q1 2025, indicating a cautiously optimistic outlook supported by June’s production growth.

Despite these positive signs, business owners remain cautious, adopting a wait-and-see approach amid concerns over US tariffs on exports and ongoing US-China trade tensions. This caution is expected to intensify with the recent introduction of a 30% tariff on South African products entering the US market, effective from August 7, 2025. Nonetheless, companies continue to maintain substantial cash reserves, reflecting a prudent approach amidst current domestic and global economic uncertainties in 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

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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.