Macroeconomic uncertainty drags manufacturing sector into decline

According to Stats SA the decline is broad based and is driven by contractions in nine of 10 manufacturing divisions

- SIPHELELE DLUDLA

ECONOMISTS have warned that the ongoing macroeconomic and policy uncertainty will continue to leave operating conditions unfavourable for manufacturing production and drag the sector's contribution to South Africa's economic growth.

This comes after manufacturing output fell 6.3% year-on-year in April following a revised 1.2% contraction in March.

This was the sixth consecutive monthly contraction and the sharpest drop since March 2024.

Maarten Ackerman, chief economist at Citadel, expressed deep concern over the sector's trajectory, emphasising its vital role in job creation and economic stimulation. Manufacturing remains one of the few sectors in the South African economy with significant potential to create jobs, stimulate broader economic growth, and provide opportunities for the unemployed.

In 2024, the manufacturing sector contributed 13% to South Africa's gross domestic product (GDP). with the sector’s nominal GDP forecast to grow by an average rate of 5.7% per annum over the next decade. This sector also employs over 1.6 million people and is a significant driver of the country's export economy.

South African industries have benefited from high carbon intensity and lower export prices, but the European Union's Carbon Border Adjustment Mechanism (CBAM) and similar policies will erode this advantage, leading to higher costs, lower demand and increased pressure from EU importers for carbon footprint and sustainability compliance.