Manufacturing output ended 2024 on a weak note

Manufacturing output (not seasonally adjusted) declined by 1.2% year-on-year (y/y) in December 2024, following an upwardly revised contraction of 1.9% y/y in November (previously reported as -2.6%).

Thanda Sithole, senior economist at FNB, said although the decline continued, the outcome was better than Reuters’ consensus forecast of a 1.7% drop, suggesting that the sector showed some resilience despite ongoing challenges.

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Seasonally adjusted manufacturing output

He added that seasonally adjusted manufacturing output, essential for calculating quarterly GDP, fell by 2.4% month-on-month (m/m) in December.

“This decline aligned with the PMI Business Activity Index, reflecting continued weakness in manufacturing activity.”

In November, the sector saw a revised 1.3% m/m decline (previously reported as -1.1%).

“Looking at the broader picture, manufacturing output contracted by 0.8% for the entire fourth quarter of 2024.”

Challenging year for manufacturing in 2024

Sithole said the decline indicates that the sector dragged overall GDP growth, highlighting manufacturers’ challenges during the latter part of the year.

“The sector struggled in 2024, constrained by weak domestic demand and a challenging global economic environment.

“Overall output declined by 0.4% for the year, following a modest growth of 0.6% in 2023.”

The sharp 13.3% contraction in motor vehicle, parts, and accessories production, reflecting sluggish new vehicle sales, was a key factor in this decline.

However, there is hope for a modest recovery in automotive production as new vehicle sales show improvement.

Additionally, an anticipated rise in domestic aggregate demand and the suspension of load shedding are expected to support manufacturing recovery in 2025.

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Sector-specific analysis

He added that the decline in manufacturing output in December was broad-based, with eight out of ten divisions recording contractions.

Key contributors to the overall decline included:

• Basic iron and steel, non-ferrous metal products, metal products, and machinery: This division contracted by 6.0%, reducing total manufacturing output growth by 1.2 percentage points (ppts).
• Wood and wood products, paper, publishing, and printing: Output fell by 2.0% y/y in December, following a 3.1% y/y decline in November.
• Motor vehicles, parts and accessories, and other transport equipment: This sector continued its steep decline, dropping by 20.8% y/y in December and subtracting 1.0 ppts from overall output growth.

Sectors limiting the overall decline

Despite the widespread contractions, some sectors showed resilience and helped limit the overall decline in manufacturing output:

• petroleum, chemical products, rubber, and plastic products: Output in this division expanded by 1.6% y/y, accelerating from a 1.2% increase in November.
• Food and beverages: This sector experienced robust growth, expanding by 5.8% year over year in December after a 2.9% y/y increase in November.

Outlook for 2025

Sithole added that the manufacturing sector is expected to recover in 2025 gradually.

“The anticipated improvement in domestic aggregate demand, combined with the suspension of load shedding, should provide a more supportive environment for manufacturing growth.

“Additionally, a modest recovery in automotive production is likely as new vehicle sales continue to show signs of improvement.

“While challenges remain, particularly in global demand dynamics, the sector’s resilience in late 2024 and positive developments in key segments offer cautious optimism for the year ahead.”

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