Manufacturing and mining production added to GDP, but no reason for optimism

Manufacturing and mining production were a mixed bag heading into the second half of the year, and although these industries contributed to the small increase in GDP, there is no reason for optimism about these industries.

Statistics SA announced the latest data for manufacturing and mining on Wednesday. The data shows that South Africa’s mining sector fared better than manufacturing in July, after both industries made positive contributions to gross domestic product (GDP).

However, Jee-A van der Linde, senior economist at Oxford Economics Africa, says there is no reason to be overly optimistic about the industries’ near-term outlook given binding supply-side constraints.

Seasonally adjusted mining production increased by 1.0% in July compared to June, and output was up by 4.4% compared to a year ago. “This latest outturn exceeded our expectations of a 3.0% increase as well as the consensus forecast of 3.2%,” Van der Linde says.

The main contributor to the annual increase was iron ore (+12.1%), platinum group metals (+6.2%) and other metallic minerals (+45.8%). Seasonally adjusted mining production increased by 5.8% during the three months ending July, compared to the preceding three-month period, which indicates that the sector made a solid start to the second half of the year.

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Increase in mining indicates solid start to third quarter for mining

Thanda Sithole, senior economist at FNB, says the increase in mining production marks a solid start to the third quarter, following a decent contribution to GDP growth in the second quarter. “The outcome was stronger than the Bloomberg consensus expectation of 3.4%.

“Seasonally adjusted, mining output also increased by 1.0%, the fifth consecutive monthly increase, providing early signs of continued momentum in GDP growth.

“The ongoing recovery in mining activity is encouraging, particularly against the backdrop of subdued domestic growth and elevated global trade uncertainty. If sustained, this momentum would support GDP growth.”

However, she says, the weakness recorded in the first half of the year suggests mining output could still contract by close to 1% in 2025. Year-to-date, output is down by 1.9%, underscoring reduced activity in key sectors, such as platinum group metals, gold and coal.

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Boosting SA’s logistics critical to boosting mining activity

“While favourable terms of trade and US tariff exemptions on certain critical minerals may provide some support, soft external demand and persistent uncertainty should keep global growth sluggish. Domestic structural reforms to improve port and rail logistics will be critical to boosting medium- to long-term mining activity.”

Sithole says the decline in seasonally adjusted manufacturing production ran counter to their expectation of an annual increase in output.

The largest negative contribution to the annual rate came from iron & steel and metal products (-3.3%) and wood products (-1.8%).

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Manufacturing did better in July, but still 0.7% lower than a year ago

Seasonally adjusted manufacturing production increased by 2.5% during the three months ending July compared to the preceding three-month period. Statistics SA notes that seven of the ten manufacturing divisions increased over this period.

According to Statistics SA, manufacturing production decreased by 0.7% in July 2025 compared to July 2024. Basic iron and steel, non-ferrous metal products, metal products and machinery division (-3.3%) and the wood and wood products, paper, publishing and printing division (‑1.8%) were the largest negative contributors.

Seasonally adjusted manufacturing production decreased by 0.5% in July 2025 compared to June 2025 after month-on-month changes of 0.4% in June 2025 and 2.3% in May 2025. In addition, seasonally adjusted manufacturing production increased by 2.5% in the three months ended July 2025 compared to the previous three months.

Seven of the ten manufacturing divisions reported positive growth rates over this period. The largest positive contributions were reported for food and beverages (3.4%), petroleum, chemical products, rubber and plastic products (4.1%) and motor vehicles, parts and accessories and other transport

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US tariffs dimming outlook for manufacturing sector

Seasonally adjusted manufacturing sales decreased by 0.3% in July 2025 compared to June 2025 after month-on-month changes of 2.2% in June 2025 and 1.9% in May 2025. It also increased by 2.6% in the three months ended July 2025 compared to the previous three months.

The largest positive contributions were made by the food and beverages division (4.9%) and the petroleum, chemical products, rubber and plastic products division (4.4%).

Van der Linde says the latest output numbers for July point to a subdued start to the second half of 2025, while the August manufacturing PMI signals further weakness.

“The mining (+3.7% q/q) and manufacturing (+1.8%) sectors were among the main drivers of growth during the second quarter of 2025. It remains to be seen whether this positive momentum will extend further into the second half of 2025, amid soaring precious metal prices.

“While South Africa’s salient mineral exports remain largely exempt from US tariffs, the manufacturing sector’s outlook has dimmed as a result of the tariffs, particularly because South Africa’s merchandise exports to the US are generally more diversified and comprise more value-added goods.”