Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is an authorised Financial Services Provider (FSP 46449) under the Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
August 12, 2026

Manufacturing Production – June 2026

South Africa’s manufacturing sector came under renewed pressure in June 2026, with production declining by 1.7% following strong growth in May. The contraction was driven mainly by weaker output in food and beverages, wood products, and motor vehicles and transport equipment. Manufacturing production also fell by 1.5% in the second quarter, with seven of ten sectors recording declines. Despite subdued production, manufacturing sales increased by 0.6% during the quarter, supported by stronger sales in chemicals, petroleum, rubber and plastics, as well as motor vehicles. However, declining employment and a PMI below the 50-point threshold highlight growing caution among manufacturers. Ongoing US trade tariffs and diplomatic tensions are adding further pressure, while businesses continue to maintain high cash reserves as they navigate domestic and global economic uncertainty.

In June 2026, South Africa’s manufacturing output contracted by 1.7%, following the 4.4% increase in May 2026. This decrease is slightly better than the 2.3% decrease analysts forecast for June 2026. During the same period, the Purchasing Managers’ Index (PMI) decreased 3.5 points, from 50.8 in May 2026 to 47.3 in June 2026. This indicates a cautious view of the business environment as output contracted within the sector.

The contraction in manufacturing production during June was largely attributed to declines in:

  • Food and beverage production, which declined by 3.9% and contributed -1.0 percentage point,
  • wood and wood products that contracted by 8.9% and subtracted 0.9 percentage points from output growth, and
  • lower output in motor vehicles, parts and accessories and other transport equipment, which declined by 5.3% and contributed -0.4 points towards the contraction in manufacturing output for June.

Seasonally adjusted manufacturing production for the second quarter also decreased by 1.5% compared to the first quarter of 2026. Out of ten sectors, seven reported contractions during this period. Significant contractions included:

  • Food and beverages, declined by 3.0%, subtracting 0.8 percentage points from growth.
  • Furniture and ‘other’ manufacturing declined by 9.3%, subtracting 0.4 percentage points from growth
  • Basic iron and steel, non-ferrous metal products, metal products and machinery, which decreased by 1.2%, also contributed a 0.3 percentage point reduction.

Seasonally adjusted manufacturing sales increased by 0.6% during the second quarter of 2026 compared to the previous quarter. Significant increases occurred in:

  • Petroleum, chemical products, rubber and plastic products division, which increased by 5.0%, adding 1.1 percentage points towards sales growth for the quarter.
  • The motor vehicles, parts and accessories and other transport equipment division, which rose by 4.3%, added another 0.6 percentage points towards sales growth for the quarter under review.

Manufacturing is a critical component of South Africa’s economy, employing approximately 1.57 million people and accounting for 12.5% of the GDP in 2025. Employment slightly decreased from 1.587 million in Q1 2026 to 1.571 million in Q2 2026. GDP figures for the fourth quarter indicate a 0.6% quarterly decrease in manufacturing output, suggesting that US trade tariffs since August 2025 have caused some distress in the manufacturing sector by eroding price competitiveness in the US market, driven by higher import prices due to tariffs on South African exports. The reduction in employment numbers for the second quarter of 2026 suggests that the growing challenges South African exporters face in accessing the US market are starting to show up in annual growth numbers and employment opportunities for the sector at large. It should, however, be noted that exports to the US market have declined by 56% since 2025 due to tariffs, trade tensions and diplomatic “disputes” between Pretoria and Washington.

As a result of trade tariffs with the US and ongoing diplomatic tensions between Pretoria and Washington, business owners remain cautious, as evidenced by the June 2026 PMI data, which is now below the critical 50-point threshold. However, companies are still maintaining substantial cash reserves of approximately R1.8 trillion, up from R1.1 trillion in the first quarter of 2025, according to the Reserve Bank. This reflects a prudent approach amid current domestic and global economic uncertainties in the short- to medium-term.

Back to News

More Coverage

Consumer Inflation – August 2026

South Africa’s August 2026 inflation data present a complex outlook: headline CPI rose to 4.4%, remaining below market expectations yet above the upper limit of the inflation target range, while services inflation continued to climb, and fuel and transport costs exerted further pressure on households and businesses. With the economy contracting, international oil prices rising and global uncertainties, including Middle East tensions and tariff disputes, continuing to weigh on the rand and domestic prices, attention is now focused on the South African Reserve Bank’s next interest-rate decision. Read the full report for an analysis of the factors driving inflation, the risks facing the economy and what the latest developments could mean for consumers, businesses and monetary policy in the months ahead.

Own Goal at the Polls: What the ANC’s Nomination Debacle Means for Key Municipalities

The recent Electoral Court ruling dismissing the ANC’s bid to compel the IEC to accept late candidate submissions is a significant event with profound implications for the upcoming 4 November 2026 local government elections.

A view on Demand in the Economy: Retail Sales performance – July 2026 Data

South Africa’s retail sector delivered a striking surprise in July 2026, with sales climbing 3.4% against market expectations of a 3.0% contraction, but the story beneath that headline number is far more nuanced than it first appears. This report unpacks the fragile balancing act facing local households: inflation easing to 4.3% yet still stubbornly above the SARB’s new 2–4% target band, administered prices and utility costs rising by more than 4.0%, wage growth lagging behind severe fuel shocks, and the lingering effect of May’s 25-basis-point rate hike prompted by inflationary pressures well beyond Pretoria’s control. We examine why business confidence firmed (SACCI up from 123.5 to 125.4) while consumer sentiment slumped sharply (FNB/BER down from -7 to -19), which categories, from “other retailers” to general dealers and household goods, actually carried the growth, and what the extension of AGOA to end-2027 means now that fresh visa tensions between Washington and Pretoria have placed South Africa’s eligibility squarely under the microscope. Read the full report to understand whether this recovery has the legs to survive higher fuel prices, a possible second rate increase, and a second-quarter contraction in economic activity — or whether July’s good news was simply borrowed from the easing cycle of 2024/25.

Gross Operating Surplus: A View on Company Profits 2026Q2

South Africa’s business profitability showed surprising resilience in the second quarter of 2026, outpacing inflation despite a 0.2% contraction in economic activity, higher oil and import prices, trade tariffs, and ongoing diplomatic tensions. While overall profit growth slowed from the first quarter, several sectors, including transport and logistics, mining, electricity and utilities, personal services, and trade, recorded substantial gains, offering important clues about where the economy’s strongest opportunities may lie. This report examines the forces shaping Gross Operating Surplus across key industries, explains the mounting pressures on company performance, and considers whether easing geopolitical tensions, lower oil prices, and greater policy certainty could unlock stronger economic activity, employment, and investment in the months and years ahead.

South African Gold and Foreign Exchange Reserves for August 2026

South Africa’s international liquidity position strengthened in August 2026, with net gold and foreign exchange reserves rising by USD 1,9 billion as the rand gained nearly 30c against the US dollar and the gold price climbed to USD 4 460/oz, some 30% higher than a year earlier. Yet beneath these encouraging headline figures lies a far more complex picture: the ongoing conflict in the Middle East and tensions around the Strait of Hormuz are keeping oil prices elevated, while shifting US tariff measures, a one-year AGOA extension and the Federal Reserve’s decision to hold rates steady all point to continued volatility for the rand. With the South African Reserve Bank’s third-quarter interest rate decisions hanging in the balance, this report unpacks what these commodity and currency movements mean for inflation, the mining sector and South Africa’s economic outlook for the remainder of the year.