South Africa’s manufacturing production fell 2.8% year-on-year in February, Statistics South Africa reported on Wednesday. Economists had expected a decline of just 0.3%, making the result significantly worse than forecast.
Why it matters: Manufacturing accounts for roughly 12% of GDP. A deepening slump in the sector threatens the government’s growth projections and the jobs of more than 1.1 million workers in the industry.
The data
On a seasonally adjusted month-on-month basis, output dropped 2.2% in February, reversing an upwardly revised 1.9% gain in January. The sharpest declines came from wood and paper products, which fell 9.7%, food and beverages at 4.5%, and basic metals and machinery at 3.6%.
The Absa Purchasing Managers’ Index had already signalled trouble, falling to 47.4 in February from 48.7 in January. A reading below 50 indicates an overall deterioration in business conditions.
Broader trend
The February figures extend a negative pattern that has persisted into 2026. January’s output was revised down to a 0.1% annual decline, meaning the sector has now contracted in consecutive months.
Analysts at Nedbank said the persistent weakness puts pressure on the South African Reserve Bank ahead of its May monetary policy committee meeting. Rate cuts, which manufacturers have called for to stimulate investment, become harder to justify if inflation remains above the midpoint of the target band.
What comes next
The Iran conflict and its impact on oil prices add further uncertainty. Higher input costs for energy-intensive manufacturers could deepen the contraction in coming months, though the recent ceasefire may provide temporary relief.
Treasury’s February budget projected 1.9% GDP growth for 2026. Sustained manufacturing weakness at this scale makes that target harder to achieve.