March manufacturing output down 0.8% y/y and 2.2% m/m, weighs on GDP growth

Manufacturing output (not seasonally adjusted) declined by 0.8% y/y in March, following a 3.2% y/y decline in February – marking the eighth consecutive month of annual contraction. The outturn was weaker than the Bloomberg consensus, which had forecast a 0.8% y/y increase. Seasonally adjusted manufacturing output, which aligns with the official calculation of quarterly GDP growth, contracted sharply by 2.2% m/m, after expanding by a revised 0.7% m/m in February (previously reported as 0.3%).

Today’s data confirms that the manufacturing sector dragged real GDP growth in 1Q25, with output falling by 2.3% q/q, a steeper decline than the 0.9% recorded in 4Q24.

Outlook

Weak economic activity in the manufacturing sector persists, with output down 2.4% in the first three months of 2025 compared to the same period in 2024. This underscores subdued domestic demand, a challenging global environment, and elevated policy uncertainty. The BER Manufacturing PMI for April suggests continued weakness at the start of 2Q25, with the business activity and new sales orders indices falling by 8.3 and 12.8 points to 40 and 36.1, respectively. Sentiment in the sector was also severely affected, with the expected business conditions index dropping by 9.4 points to 48.6 – its lowest level since November 2023.

While domestic demand is expected to gradually recover and support manufacturing activity, the outlook remains clouded by global uncertainties. Nonetheless, the ongoing implementation of structural reforms, alongside the recent launch of Operation Vulindlela Phase 2.0, will be critical in easing binding constraints and supporting economic activity over the medium-to-long term.

Selected sector analysis

The decline in manufacturing output in March was driven by contractions in four out of ten manufacturing divisions. A closer look at the major divisions reveals that:

• The largest drag was recorded in the petroleum, chemical products, rubber, and plastic products, which contracted by 2.5% y/y after contracting by 5.4% y/y in February, dragging overall manufacturing output growth by 0.5 percentage points (ppts).
• Wood and wood products, paper, publishing, and printing also declined by 2.1% y/y after declining by 3.2% y/y in February.
• Food and beverages output was down by 0.4% y/y after falling by 0.2% in February, largely reflecting weakness in the production of beverages and other food products.

Growth was recorded in the basic iron and steel and motor vehicles divisions, but this was not enough to counteract decreased economic activity on the rest of the divisions.

• Basic iron and steel, non-ferrous metal products, metal products and machinery expanded by 0.7% y/y, reflecting a modest rebound from a 0.4% contraction in February.
• For the first time since April 2024, the motor vehicles, parts and accessories, and other transport equipment division, posted growth of 0.5% y/y. This reflected a rebound (6.5% y/y) in motor vehicle production. Meanwhile other sub-divisions including parts and accessories remained in contraction.