By Thanda Sithole
Manufacturing output (not seasonally adjusted) increased slightly by 0.9% y/y in March, reflecting a rebound from a 2.3% contraction (previously -2.8%) in February. This marked the first monthly annual increase following four consecutive months of negative growth.
On a seasonally adjusted basis, which is more relevant for quarterly GDP calculations, output improved by 0.8% m/m, partially rebounding from a 1.8% monthly decline in February. However, this was insufficient to translate into positive quarterly growth and, as such, output declined by 1.0% q/q in 1Q26, suggesting that the manufacturing sector weighed on GDP growth in the first quarter of 2026.
Outlook
Manufacturing output remains weak, having declined by 0.5% so far this year compared to the corresponding period in 2025. We expect the sector to remain under pressure in the near term amid ongoing Middle East turmoil and rising energy-related production and freight transport costs. The manufacturing PMI improved in April, driven by stronger business activity and new sales orders. This may suggest that output growth was sustained in April. However, manufacturers' expectations for business conditions remains subdued, underscoring the continued difficulty in the operating environment.
Selected sector analysis
The March outcome was broad-based, with six of the ten manufacturing divisions recording increased output (see Figure 1). The largest increase was recorded in the food and beverages division, which expanded by 3.5% y/y and contributed 0.9-percentage points to total manufacturing output growth. This was followed by the petroleum, chemical products, rubber and plastic products division, which increased by 1.8%.
