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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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Inflation Relief, Real-Economy Headwinds, and the Geopolitical Imperative for South Africa

South Africa has received a much-needed inflation reprieve, with July headline inflation easing to 4.3% and giving the South African Reserve Bank room to hold interest rates steady, but monetary relief alone cannot rescue an economy facing contracting mining and manufacturing sectors, depressed investment, mass unemployment, and mounting pressure on export earnings. This report examines how a 12.5% US tariff and a 56% annualised plunge in exports are intensifying the country’s economic vulnerability, while diplomatic disputes over property rights, empowerment policy, rural safety, political rhetoric, and South Africa’s geopolitical alliances threaten access to the strategically vital US market. It also sets out the practical policy choices, from structural reform and infrastructure investment to pragmatic trade diplomacy, that could determine whether South Africa converts this brief moment of inflation stability into sustainable growth or slips deeper into stagnation

Consumer Inflation – July 2026

South Africa’s July 2026 inflation reading delivered a genuine surprise: consumer prices rose just 4.3% year-on-year, well below June’s 5.0% and under the 4.5% the market had pencilled in, yet the story beneath that headline is far more complicated than a simple cooling trend. Goods inflation has slipped into the SARB’s new 2–4% target band, but services inflation stubbornly holds at 5.0%, revealing that price pressure is now entering the economy through a channel monetary policy struggles to reach. Meanwhile, housing, transport, and financial services drove the bulk of the increase; fuel costs remain elevated amid the renewed Middle East conflict and rising oil prices; and households and businesses relying on short-term credit are dangerously exposed to any shift in rates, the rand, or import costs. Add US tariffs weighing on manufacturing, fragile 0.5% first-quarter growth, and a Reserve Bank that has already wrong-footed markets twice this year, and the run-up to the 23 September MPC meeting becomes anything but predictable. This report unpacks what the numbers actually signal, why the SARB is holding its nerve, and what it will take to tip the next rate decision either way.

Mining Production and Sales for June 2026

South Africa’s mining sector faced renewed pressure in June 2026, with production declining 4.0% amid sharp contractions in iron ore, coal and platinum-group metals, while second-quarter output fell 2.7% as manganese, PGMs, gold and iron ore all weakened. Yet soaring commodity prices, particularly for gold, platinum and chromium, drove a 27.2% increase in nominal mining sales, highlighting the sector’s resilience and continued importance as a source of employment, foreign exchange and economic growth. Against this mixed backdrop, the report examines the industry’s mounting challenges, including job losses, proposed export and import tariffs, the loss of AGOA benefits, uncertainty surrounding the Mining Charter, rising energy costs and geopolitical tensions affecting global trade and shipping. It also considers whether temporary tariff exemptions for key steelmaking minerals can provide much-needed relief to an industry navigating an increasingly volatile global economy.

South African Gold and Foreign Exchange Reserves for July 2026

South Africa’s international liquidity position reveals a complex economic landscape shaped by global geopolitical tensions, commodity price dynamics, and evolving trade relationships. While Net Gold and Foreign Exchange Reserves showed modest growth in July 2026, buoyed by historically elevated gold prices and strategic central bank interventions, underlying pressures, including Middle East conflict-driven fuel costs, currency volatility, and shifting US trade policies, threaten inflation stability and monetary policy decisions in the months ahead. This comprehensive analysis examines how commodity trends, Reserve Bank operations, and international developments are converging to shape South Africa’s economic trajectory, offering critical insights into what investors, policymakers, and businesses should monitor as the country navigates tariff uncertainties, geopolitical risks, and the critical third-quarter interest rate decisions that could define economic performance for the remainder of 2026.

Manufacturing Production – June 2026

South Africa’s manufacturing sector came under renewed pressure in June 2026, with production declining by 1.7% following strong growth in May. The contraction was driven mainly by weaker output in food and beverages, wood products, and motor vehicles and transport equipment. Manufacturing production also fell by 1.5% in the second quarter, with seven of ten sectors recording declines. Despite subdued production, manufacturing sales increased by 0.6% during the quarter, supported by stronger sales in chemicals, petroleum, rubber and plastics, as well as motor vehicles. However, declining employment and a PMI below the 50-point threshold highlight growing caution among manufacturers. Ongoing US trade tariffs and diplomatic tensions are adding further pressure, while businesses continue to maintain high cash reserves as they navigate domestic and global economic uncertainty.