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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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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.