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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
June 23, 2026

Manufacturing Production – April 2026

In April 2026, South Africa’s manufacturing sector experienced a worrying 2.9% contraction, in stark contrast to earlier growth forecasts. While the Purchasing Managers’ Index (PMI) indicated slight optimism, with a rise to 52.6, the underlying data revealed significant declines in key industries, notably basic iron and steel and motor vehicles, which contributed heavily to the downturn. This article delves into the factors driving this decline, including the impact of US trade tariffs and ongoing diplomatic tensions, which have exacerbated the situation and led to a steep drop in exports. Despite these challenges, manufacturers have taken a cautious yet strategic approach, maintaining robust cash reserves amidst the turmoil. Explore the full report to understand the implications for South Africa’s economic landscape and the future of manufacturing in the region.

In April 2026, South Africa’s manufacturing output contracted by 2.9%, following the 1.5% increase in March 2026. This decrease is far worse than the 1.2% increase analysts forecast for April 2026. During the same period, the Purchasing Managers’ Index (PMI) increased 3.6 points, from 49.0 in March 2026 to 52.6 in April 2026. This indicates a positive view of the business environment as output expanded within the sector.

The contraction in manufacturing production during April was largely attributed to basic iron and steel, non-ferrous metal products, metal products, and machinery, which decreased by 6.0%, contributing -1.4 percentage points to the overall manufacturing decline. Similarly, the wood and wood products, paper, publishing and printing industry saw a growth decline of 10.0%, subtracting an additional 1.0 percentage points, while the motor vehicles, parts and accessories and other transport equipment industry contracted by 11.0%, subtracting an additional 0.9 percentage points towards manufacturing output during this period. These sectors were significant contributors to the industry’s underperformance in April.

Seasonally adjusted manufacturing production decreased by 1.3% for the rolling quarter ending April 2026 compared to the previous rolling quarter. Out of ten sectors, six reported contractions during this period. Significant contractions included:

  • Petroleum, chemical products, rubber and plastic products, declined by 3.5%, subtracting 0.8 percentage points from growth.
  • Wood and wood products, paper, publishing and printing, which decreased by 3.4%, also contributed a 0.3 percentage point reduction.

Seasonally adjusted manufacturing sales increased by 2.3% during the rolling quarter ending April 2026 compared to the previous rolling quarter. Significant increases occurred in:

  • Basic iron and steel, non-ferrous metal products, metal products and machinery, which increased by 5.7%, adding 1.2 percentage points towards sales growth for the quarter.
  • The motor vehicles, parts and accessories and other transport equipment division, which rose by 7.1%, added another 0.9 percentage points towards sales growth for the quarter under review.

Manufacturing is a critical component of South Africa’s economy, employing approximately 1.58 million people and accounting for 12.5% of the GDP in 2025. Employment slightly increased from 1.548 million in Q4 2025 to 1.587 million in Q1 2026. GDP figures for the fourth quarter indicate a 0.6% quarterly decrease in manufacturing output, suggesting that US trade tariffs since August 2025 have caused some distress in the manufacturing sector by eroding price competitiveness in the US market, driven by higher import prices due to tariffs on South African-produced export goods. It should, however, be noted that exports to the US market have declined by 56% since 2025 due to tariffs, trade tensions and diplomatic “disputes” between Pretoria and Washington.

As a result of trade tariffs with the US and ongoing diplomatic tensions between Pretoria and Washington, business owners remain cautious, as evidenced by the April 2026 PMI data, which is just above the positive 50-point threshold. 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

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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.