South Africa's mining sector continued to decline in July, with output falling by 7.5% compared to the same period last year. This figure exceeded analysts' expectations, who had predicted a drop of 4.0%. The July data follows a decrease of 4.3% in June and 5.1% in May.
According to data from Stats SA and FNB Economics, ten out of twelve mining sub-sectors recorded a contraction. Among these, diamond production fell by 48.2%, nickel by 18.8%, and platinum group metals by 13.5%. Growth was observed only in two sectors: chrome ore increased by 13.7%, and manganese ore by 4.9%. Seasonally adjusted output in July decreased by 1.9% compared to the previous month, after a slight increase of 0.1% in June.
Global Uncertainty
According to FNB senior economist Thandi Sithole, the July data indicates persistent weakness in mining amid ongoing global uncertainty, infrastructure constraints, and rising production costs. Sithole noted that the reduction in seasonally adjusted output, along with the subsequent revision of June data, raises concerns and points to the fragility of activity in the sector, increasing the likelihood of a negative contribution to overall GDP growth in the third quarter of 2026.
He added that despite the moderate production response, favorable global commodity prices continued to support the sector, allowing mining companies to remain relatively cash-generating despite constant operational difficulties.
Manufacturing Shows Modest Improvement
In July, South Africa's manufacturing industry demonstrated modest growth in output by 1.1% compared to last year, recovering from the slump in the second quarter. Results from the ABSA PMI survey also showed an increase in both business activity and new orders at the start of the third quarter.
Most manufacturing sub-sectors increased output in July: the textile industry grew by 6.2%, and food and beverage production increased by 4.1%. However, some sectors remained relatively sluggish, with wood products and furniture decreasing by 7.3% and 6.0% respectively, and the automotive industry and related sectors by 2.9%.
Investec economist Lara Hodges emphasized that confidence among producers remains low. According to her, preliminary ABSA PMI survey data for August points to 'moderate demand, weak consumer confidence, and especially low non-essential spending,' with business activity and new orders declining again. She also added that the recent rise in global oil prices is expected to put additional pressure on costs.