Manufacturing production remained unchanged in February, declining by -3.2% y/y after January’s print was revised to -3.2% y/y from -3.3% y/y. The latest print was mainly in line with consensus estimates of -3.1% y/y.

A -3.3% y/y decrease in ‘wood & paper’ in February (+5.5% y/y in January) primarily drove the latest contractionary manufacturing reading. Further weighing on February’s headline outcome was a reading of -14.9% y/y for  ‘vehicles & transport equipment’ (-10.4% y/y in January).

Additionally, while ‘coke & petroleum’ products improved slightly, it remains the most contractionary category, with a year-on-year production decline of -17.2% y/y in February (-19.2% y/y in January).

Most other categories also continued to report year-on-year declines in output in February.

What does this mean
Manufacturing output has now declined every month since November 2024. The end of consistent load-shedding in 2024, the reduction of interest rates since September and the new government structure under the GNU have not been enough to boost investment and, ultimately, output in the domestic manufacturing sector.

Unfortunately, the outlook for the sector does not seem particularly optimistic. Manufacturing exports worldwide face an uncertain environment characterised by increased tariffs and a potential influx of cheaper Chinese goods displaced from the US market.

Domestically, structural barriers hinder improved manufacturing outcomes, and South Africa continues deindustrialising. These barriers include deteriorating infrastructure (contributing to logistical bottlenecks), failing service delivery and adverse legislation.

Policy reform at the national government level is needed to address these issues before manufacturing outcomes improve. But, amidst the current political uncertainty, there is little hope the GNU can usher in these changes.