It sounds like a bit of good news, but manufacturing output was still almost 2% lower this year than in the first half of last year.
Manufacturing output for June shows the possibility of improved GDP for the second quarter, although the increases for seven of the ten manufacturing divisions came from a low base.
According to Statistics SA, total factory production increased by 1.5% in the second quarter compared to the first quarter, while month-on-month manufacturing output remained unchanged in June.
Jee-A van der Linde, senior economist at Oxford Economics Africa, says therefore they expect manufacturing to have a positive effect on overall gross domestic product (GDP) in the second quarter.
However, he points out, manufacturing output in the first half of 2025 was still 1.7% lower compared to the first half of last year.
Seasonally adjusted manufacturing production was flat monthly in June, but output increased by 1.9% compared to a year ago. Van der Linde says the latest outcome was better than the consensus forecast of 1.0.% and their expectation of a 0.8% expansion.
The largest positive contribution to the annual rate came from food and beverages (+6.0% and contributing 1.4 ppts) and petroleum, chemical products, rubber and plastic products (+1.9% and contributing 0.4 ppt).
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Meanwhile, the motor vehicles, parts and accessories and other transport equipment division output was unchanged from a year ago. The latest industry data from the Automotive Business Council indicates that cumulative domestic vehicle production stood at 284 125 units in June, down 2.4% compared to the first six months of 2024.
Although cumulative new vehicle sales are up 13.6% in the first half of the year and export volumes are roughly 2.5% higher over the same period, South Africa’s cumulative new vehicle imports in the first half of 2025 are 32.4% higher than the same period in 2024, indicating that local manufacturers are producing fewer units.
Seasonally adjusted manufacturing production increased by 1.5% during the second quarter of 2025. Statistics SA notes that seven of the ten manufacturing divisions increased over this period and the latest manufacturing output numbers for June indicate that the manufacturing sector is expected to make a positive contribution to GDP for the second quarter.
However, Vander Linde says, the quarterly increase stems from a low base, with manufacturing production still down 1.7% in the first half of 2025 compared to a year ago.
“We currently forecast that real GDP increased by 0.2% in the second quarter of 2025 compared to the 0.1% increase recorded during the first three months of 2025. Depending on the remaining June performance, this figure could be revised higher.”
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Thanda Sithole, senior economist at FNB, also says that manufacturing output was encouraging in June but that challenges remain. “Despite the recent positive print, year-to-date manufacturing output is down by 1.7%, reflecting broad-based weakness across several divisions.
She notes that automotive production In particular is down by 5.6% year-to-date and faces 25% United States (US) tariffs, which resulted in vehicle exports (units) to the US declining sharply by just over 80%.
Traditional Original Equipment Manufacturers also face fierce competition from entry-level (affordable) imports from the East, which may be contributing to the continued weakness in domestic automotive production, she points out.
“The broader sector also faces a 30% reciprocal tariff, which became effective last week Thursday. While the manufacturing PMI rose above the 50-neutral mark to 50.8 points in July, due to improving domestic demand, the expected business conditions index deteriorated, suggesting that manufacturers remain concerned about the prevailing operating environment.
“We expect near-term manufacturing activity to remain subdued, with tariffs posing significant uncertainty for manufacturers.”