By Thanda Sithole
Manufacturing output (not seasonally adjusted) declined by 3.2% y/y in February, matching the contraction recorded in January, though slightly revised from an initial estimate of a 3.3% decline. The outcome was worse than the Reuters consensus forecast of a 2.9% decline. Seasonally adjusted manufacturing output, which is critical for the calculation of quarterly GDP growth, grew at a modest pace of 0.3% m/m, following a 0.4% increase in the previous month (revised up from 0.2%). Over the three months to February, output contracted by 2.3%, indicating a potential drag on overall GDP growth in 1Q25.
Outlook
The manufacturing sector remained under pressure in 2024, constrained by weak domestic demand and a challenging global environment. This weakness has extended into the early months of 2025, with output down by 3.2% year-to-date (January to February) compared to the same period last year. Consistent with our latest macroeconomic projections, we expect the manufacturing sector to grow by no more than 1% this year.
While the risk of energy constraints has diminished significantly, concerns persist around the impact of tariffs and their effect on business sentiment and manufacturing production capacity. Although the 90-day suspension of tariffs announced by United States President Donald Trump offers temporary relief and scope for further negotiations, the baseline 10% duty remains in place.
Selected sector analysis
The decline in manufacturing output in February was broad-based, with seven out of ten divisions recording contractions. Zoning into the major divisions:
