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20 October 2026 – South Africa’s manufacturing sector suffered a setback in August, with production falling by 4.3% year-on-year after climbing 1.1% in July.
The decline fell below market expectations of a 0.4% increase and was accompanied by a 3.1% month-on-month contraction in seasonally adjusted production, Statistics South Africa (Stats SA) said.
According to Investec economist Lara Hodes, the result was consistent with the weakness seen in the Absa Purchasing Managers’ Index (PMI) during August, when the index fell to 45.8 points.
The PMI, compiled by the Bureau for Economic Research (BER), showed a deterioration in business activity and new sales orders, with manufacturers reporting subdued demand, weak consumer confidence and softer spending on non-essential goods.
The biggest losers
“The result was markedly below consensus expectations,” Hodes said, adding that manufacturing confidence remained subdued amid insufficient demand and growing concerns about the broader business environment.
August’s decline was broad-based, with only the textiles, clothing, leather and footwear division recording growth compared with a year earlier.
The largest drag came from petroleum, chemical products, rubber and plastics, which contracted by 5% and detracted 1.1 percentage points from the overall manufacturing result. Basic chemicals were particularly weak, falling 19%.
Motor vehicles, parts and other transport equipment also recorded a significant decline of 8.8%, while food and beverages fell 3% and the basic iron and steel, non-ferrous metals, metal products and machinery division declined by 3%.
This comes against a backdrop of a broader manufacturing slowdown. The sector contracted by 1.8% in the second quarter of this year, contributing 0.2 percentage points to the economy’s 0.2% contraction during the period.
On the upside, there was some improvement in early September indicators.
The Absa PMI rose 4.9 points to 50.7 in September, moving back above the 50-point level that separates expansion from contraction after three consecutive months below it. New sales orders rebounded sharply, while business activity recovered much of its August decline.
Hodes said manufacturers nonetheless continued to face elevated uncertainty, particularly around rising input costs and the impact of the conflict in the Middle East on profitability. Source: IOL Business Report