Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Are South Africa’s metros losing their economic edge? – Full Analysis.
South Africa’s metropolitan economies are losing momentum, with job growth slowing and, in recent years, falling behind the rest of the country.
This is according to the Cities Economic Outlook 2026 report, which tracks more than a decade of employment, population and industrial trends across the country’s eight metros.
The report finds that while metros have historically outperformed other parts of the country, this trend has reversed over the past decade.
Metropolitan employment growth has faltered and now lags the rest of South Africa, marking a significant shift in the country’s economic trajectory. Only Cape Town and Tshwane have bucked this trend, with other metros showing weaker performance and, in some cases, stagnation.
Economic hubs
The slowdown comes despite metros remaining central to the economy.
Around four in ten South Africans live in metropolitan areas, which have absorbed roughly half of the country’s population growth over the past three decades.
Yet job creation has not kept pace. The report shows that metro employment growth has averaged just over 1% per year over the past decade, with the gap between metros and the rest of the country widening in recent years.
The COVID-19 pandemic deepened this shift, with metros absorbing the bulk of job losses and recovering more slowly than non-metro areas.
“The COVID-19 pandemic triggered an unprecedented decline in formal employment, with metros accounting for 78% of national job losses at the height of the crisis. Although national employment recovered to 4% above pre-pandemic levels by February 2024, metro growth has lagged behind the rest of the country,” the report said.
It also noted that “youth job losses were most intense and have shown little sign of recovery”. Youth unemployment is currently around 43.8% officially according to Statistics South Africa and is higher than the overall average unemployment rate.
Structural changes
Beyond cyclical shocks, the data points to structural changes in the composition of urban economies.
Higher-value and tradable sectors such as manufacturing and construction have stagnated, while job growth has been concentrated in non-tradable and public service sectors.
The South African Reserve Bank yesterday noted that manufacturing activity continued to be weighed down by weak investment, rising energy costs and subdued demand, with most subsectors recording declines.
This shift raises concerns about the long-term sustainability of metro economies, which rely on productive, tradable sectors to drive growth and investment.
The report also highlights a sharp decline in construction employment, signalling weak infrastructure investment and limited expansion in the built environment – a key indicator of economic dynamism.
Service delivery
At the same time, metros continue to face mounting pressure from rapid population growth. Large cities are expanding quickly, in some cases doubling in size every two to three decades, placing strain on infrastructure, service delivery and housing.
This combination of rising population and weak job creation is contributing to higher unemployment and growing economic pressure in urban areas.
The report warns that South Africa’s broader economic outlook is closely tied to the performance of its cities.
If metropolitan economies fail to lead in job creation, investment and high-value activity, national growth will remain constrained.
Growth engines
Dr Duncan Pieterse, Director-General of the National Treasury, said: “Our cities are the engines of national economic growth, inclusion and innovation. They drive economic activity in their regions. If our cities do not work, South Africa cannot grow.”
To reverse the trend, the report calls for stronger coordination between government, state-owned entities and the private sector, alongside increased investment in infrastructure, industrial upgrading and spatial integration.
Without these interventions, the weakening of metro economies is likely to continue, with implications for employment, growth and inequality.
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