By: Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole, Koketso Mano
A busy data calendar provides a reading on SA's economic pulse
The past week was busy on the economic data front, offering valuable insights into current conditions and potential future trends. We take the opportunity to link these indicators and present a concise view of what we think of prevailing developments and whether they challenge our outlook.
Corporates
First, a look into production data suggests that activity remains uneven. While mining has started 3Q25 strong, supported by higher commodity prices, manufacturing has been volatile and highlights structural weakness that has been exacerbated by tepid global demand. Fortunately, structural impediments are being gradually alleviated, and load-shedding has been minimal this year. That said, electricity production posted negative results in August, falling 1.1% m/m and 3.1% y/y, and the performance so far in the quarter is negative. This suggests that the sector will have to ramp up production in September to contribute to GDP growth. The latest external trade data reflected a softer surplus in August of R4.0 billion versus R19.6 billion in the prior month, as exports contracted by 6.8% m/m while imports increased by 1.9%. Compared to a year ago, exports are higher by 2.2% though slower than the 4.7% import growth - this explains the softer year-to-date (YTD) trade surplus of R101.8 billion versus R121.4 billion in the comparable period last year. The global trade impasse is expected to weigh on exports, but we have been positively surprised by the performance of agricultural exports as well as vehicles. The latter recorded 32.9% y/y growth in September, and a 6% YTD increase compared to the same period in 2024.
Looking ahead, the manufacturing PMI returned to expansionary territory in September, recording 52.2 index points from 49.5 previously. The 3Q25 average is 50.8 points, higher than the 45.4 points in 2Q25, suggesting an expansion in manufacturing production into 2H25. Seemingly, an improvement in domestic demand has supported this recovery, and stable purchasing prices are also helpful. That said, this is only the second time the PMI has been positive, and manufacturers remain cautious about near-term conditions as trade restrictions and potential dumping weigh on the sector. In line with this, employment creation is likely to remain subdued, and we saw job losses to the tune of 80 000 q/q and 229 000 y/y in 2Q25 across various sectors - only mining and electricity added jobs.
However, businesses are investing to a limited extent. We have seen Private Sector Credit Extension (PSCE) remain resilient in August, with corporates leading the surge and taking up general loans, mortgages, as well as vehicle finance. This aligns with the new domestic vehicle sales data showing strength for light commercial vehicles, bakkies, and minibuses (up 19.7% y/y in September) as well as heavy trucks and buses (up 5.9%). Unfortunately, global uncertainty and weak local growth have not encouraged robust structural investment, and sentiment is downbeat. The 3Q25 FNB/ BER Civil Confidence Index gained only two index points and remained in contractionary territory at 43 points. Activity, demand, and crime will have to be monitored carefully, but this reading, along with other confidence indicators, suggests that investment and employment growth will not be robust this year.
Households
While households should be constrained by an underwhelming formal labour market, support should be afforded by lower inflation and nominal interest rates, as well as rising incomes. As we have seen through the Quarterly Employment Statistics (QES), earnings recovered faster than employment and have surpassed inflation, recording 3.4% growth in 2Q25 and 38.8% compared to 2Q19. Accordingly, September new domestic sales of passenger cars recorded the highest level of units sold since October 2014. At 38 603 units, sales were up 28.0% y/y, and while some of this is explained by the tourism industry, strong demand for entry-level and affordable brands is supportive. Ultimately, households are showing a cyclical recovery, but monetary policy remains restrictive, and this is weighing on lending appetite and credit uptake. Currently, household PSCE is mostly driven by car finance and credit cards.
This data supports our outlook for contained growth this year. We still think household spending will uphold growth as the global conditions are not conducive to robust investment. Over the medium term, structural reforms should improve operating conditions, creating an enabling environment for broader economic participation across businesses and households.
Week ahead
On Tuesday, data on SA's foreign exchange reserves for September will be published. Gross foreign exchange reserves increased to $70.4 billion in August, from $69.2 billion in July. This largely reflected a $765 million increase in foreign exchange reserves to $50.2 billion, underscoring a foreign exchange loan received on behalf of government. Meanwhile, gold reserves increased by $425 million to $13.7 billion, supported by the increase in the US dollar gold price.
On Thursday, manufacturing production data for August will be released. Manufacturing output fell by 0.7% y/y in July, following a 1.9% increase in June. Seasonally adjusted output also slipped 0.5% m/m, reversing June's 0.4% gain. Year-to- date, manufacturing output is down 1.7%, and the PMI signals that July's weakness may extend into August, posing downside risk to GDP momentum.
