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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 13, 2026

Manufacturing Production – January 2026

In January 2026, South Africa’s manufacturing output declined by another 0.7%, following a 1.4% decline in December 2025. This fall is better than the 2.0% decline analysts forecast for January 2026. During the same period, the Purchasing Managers’ Index (PMI) increased 8.2 points, from 40.5 in December 2025 to 48.7 in January 2026. This indicates a positive view of the business environment, even though manufacturing production declined during this period.

The iron and steel sector contracted by 5.7%, contributing to a 1.2 percentage-point reduction in overall manufacturing growth. Similarly, the wood and wood products industry saw another 11.0% decline, further reducing growth by an additional 1.3 percentage points. These sectors were significant contributors to the industry’s poor performance.

Seasonally adjusted manufacturing production decreased by 1.7% for the rolling quarter ending January 2026 compared to the previous rolling quarter. Out of ten sectors, seven reported contractions during this period. Significant contractions included:

  • Basic iron and steel, non-ferrous metal products, metal products and machinery, contracted by 3.3%, subtracting 0.7 percentage points from growth.
  • Motor vehicles, parts, and accessories, along with other transport equipment, declined by 6.4%, subtracting 0.5 percentage points from growth.
  • The food and beverages sector, which decreased by 1.7%, also contributed a 0.4 percentage point reduction.

Seasonally adjusted manufacturing sales decreased by 3.3% during the rolling quarter ending January 2026 compared to the previous rolling quarter. Significant declines occurred in:

  • Motor vehicles, parts, and accessories, as well as other transport equipment, which declined by 15.8%, subtracting 2.4 percentage points from sales growth for the quarter.
  • The food and beverages division, which contracted by 1.9%, reducing total sales growth by 0.5 percentage points.

Manufacturing is a critical component of South Africa’s economy, employing approximately 1.55 million people and accounting for 12.5% of the GDP in 2025. Employment slightly decreased from 1.610 million in Q3 2025 to 1.548 million in Q4 2025. GDP figures for the fourth quarter indicate a 0.6% quarterly decrease in manufacturing output, suggesting that the US trade tariffs since August 2025 are starting to hurt the manufacturing sector by eroding price competitiveness in the US market, driven by higher import prices from these newly imposed tariffs.

As a result of trade tariffs with the US and ongoing diplomatic tensions between Pretoria and Washington, business owners remain cautious, especially in light of January’s manufacturing data. However, companies are still maintaining substantial cash reserves of approximately R1.8 trillion, up from R1.1 trillion in the first quarter of 2025, according to the Reserve Bank. This reflects a prudent approach amid current domestic and global economic uncertainties in the short- to medium-term.

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Navigating the Geopolitical Crosswinds

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The Perfect Storm:

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