Manufacturing output (not seasonally adjusted) declined sharply by 6.3% y/y in April, following a revised 1.2% contraction (previously -0.8%) in March. Seasonally adjusted output rose by 1.9% m/m, though this fell short of fully reversing the 2.5% monthly decline recorded in March. Nonetheless, this marks a moderately better start to 2Q25, although the persistent annual decline underscores ongoing unfavourable operating conditions and is consistent with our assessment of downside risks to the near-term economic growth outlook.
Outlook
Broad-based weakness in manufacturing activity has persisted through the first four months of the year, with output down by 3.4% compared to the same period last year. The largest year-to-date declines have been recorded in electrical machinery, followed by the automotive sector, petroleum-related products, textiles, and the food and beverages division.
Operating conditions for domestic manufacturers remain unfavourable, as reflected in the continued decline in the manufacturing PMI. While the manufacturing PMI expected business conditions index improved to 62.5 points in May from 48.6 in April, indicating better near-term sentiment, conditions remain fluid amid ongoing macroeconomic and policy uncertainty. Domestic demand, particularly private sector fixed investment, remains weak, and external economic conditions are not conducive to growth in manufacturing merchandise exports.
Selected sector analysis
The decline in manufacturing output in April was driven by contractions in nine out of ten manufacturing divisions. A closer look at the major divisions reveals that:
- The largest drag was recorded in food and beverages output division which declined by 7.6%, dragging total growth by 1.8 percentage points (ppts), after declining by 1.9% in March. Within this division output decreases were recorded in beverages (-10.6%), other food products (-10.4%), dairy products (-5.6%) and meat products (-1.4%).
- Basic iron and steel, non-ferrous metal products, metal products and machinery was down by 6.3%, dragging overall growth by 1.4ppts. This was on the back of sharp declines in general purpose machinery, special purpose machinery and other fabricated metal products.
- After a temporary increase in March, motor vehicles, parts and accessories, and other transport equipment division reverted to contractionary territory falling sharply by 13.0% as production of motor vehicles declined by 23.2%, bodies for motor vehicles, trailers and semi-trailers declined by 21.0%, parts and accessories fell by 5.6% and other transport equipment dropped by 15.0%.
- Petroleum, chemical products, rubber, and plastic products contracted by 4.7% after contracting by 2.5% y/y in March, as basic chemicals and plastic products fell by 13.2% and 6.5%, respectively.
- Wood and wood products, paper, publishing, and printing also declined slightly by 0.1% after declining by 2.9% y/y in March.
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