South Africa’s mining production decline deepened in July, while manufacturing output recorded a modest recovery, according to the latest data from Stats SA.
Mining decline deepens
Mining production fell by 7.5% year on year in July, worsening from a revised 4.3% decline in June and undershooting the Bloomberg consensus forecast of a 4.0% contraction, Investec economist Lara Hodes said.
Lower output of platinum-group metals (PGMs), coal and iron ore were the main contributors to the decline.
Hodes said that PGM production, which accounts for just over 27% of the mining basket, fell by 13.5% year on year, compared with an 8.4% decline in June. This subtracted 3.2 percentage points from the headline figure.
Hodes added that Iron ore production fell by 8.1%, while coal output declined by 7.5%. Together, the two commodities subtracted a further 3.3 percentage points.
Hodes said that diamond production, which accounts for 2.1% of the mining basket, fell by 48.2% in July and subtracted 0.9 percentage points from the overall result.
Hodes attributed the decline partly to competition from lab-grown diamonds and weaker demand in key markets.
Hodes noted that the mining sector is also facing elevated input costs.
The Minerals Council South Africa’s Mining Composite Input Cost Index increased by 3.8% year on year in July, easing from 4.8% in June but remaining above pre-war levels, Hodes said.
FNB and WesBank senior economist Thanda Sithole said the mining data pointed to continued weakness amid global uncertainty, infrastructure constraints and elevated production costs.
“The contraction in seasonally adjusted output, together with the retrospective downward revision to June, is concerning and suggests that activity in the sector remains fragile,” Sithole said.
This increases the risk of another negative contribution to overall GDP growth in the third quarter of 2026, she said.
Sithole said the near-term outlook for mining remained challenging. “A sustained recovery would depend on improvements in electricity and logistics reliability, operational efficiency and investment in productive capacity.”
Manufacturing output improves
Manufacturing output increased by 1.1% year on year in July after contracting in the second quarter of 2026, according to Hodes.
The improvement was not broad-based. Food and beverage production rose by 4.1% year on year, driven mainly by beverages, contributing 1.0 percentage point to the headline result.
The petroleum, chemical products, rubber and plastic products grouping, which accounts for nearly 24% of the manufacturing basket, contributed a further 0.6 percentage points.
Hodes said July’s improvement should be viewed cautiously. August’s Absa Purchasing Managers’ Index indicated subdued demand, weak consumer confidence and particularly soft spending on non-essential goods.
Sithole said the July data was encouraging and could support third-quarter GDP growth if the improvement continued.
“Manufacturing could shift from being a drag on growth in the second quarter of 2026 to providing a modest positive contribution to GDP growth in the third quarter,” Sithole said.
Sithole concluded that, however, weak domestic demand, elevated production costs, infrastructure constraints and subdued business activity continue to weigh on the sector. A sustained recovery is not yet assured.
yogashen.pillay@nationalmg.co.za