Casablanca – Morocco’s secondary sector, which includes manufacturing, extractive industries, energy, environmental services, and construction, is showing early signs of recovery in 2025, although with notable disparities across branches. According to the latest quarterly business survey released by the Haut-Commissariat au Plan (HCP), overall economic activity in these sectors experienced a modest rebound in the first quarter of 2025, with cautiously optimistic projections for the second quarter.

Manufacturing activity shows gradual improvement

The manufacturing industry reported a slight increase in production during the first three months of 2025, driven mainly by stronger output in the chemical, food, and non-metallic mineral products sectors. Meanwhile, other manufacturing branches such as clothing, electrical equipment, and rubber and plastics saw a contraction.

Business leaders in the manufacturing sector noted that order books remained at normal levels, and employment levels showed general stability. However, structural challenges persisted: 37% of manufacturers experienced raw material supply issues, particularly with foreign-sourced materials. 23% of company heads reported that they were facing cash flow difficulties, with this figure reaching 44% in the leather and footwear industry.

The rate of capacity utilization (TUC) in manufacturing stood at 74%, reflecting a moderate level of activity. Stocks of raw materials were reported to be within normal ranges.

Looking ahead to the second quarter, manufacturers expect production to pick up, especially in dynamic segments such as automotive, chemical, and food industries. However, despite these positive expectations, employment levels are projected to remain unchanged, suggesting a cautious approach to workforce expansion amid persistent market uncertainties.

Mining sector benefits from phosphate growth

The extractive industry experienced a positive first quarter, driven by a rise in phosphate production, which led to higher product prices and increased employment. However, the outlook for the second quarter is less favorable. Companies in this sector anticipate a decline in production, again tied to fluctuations in phosphate activity. Despite this expected downturn, employment levels are forecast to remain stable.

Energy sector struggles, Though slight rebound expected

Unlike manufacturing and mining, the energy sector saw a notable drop in production and employment during the first quarter of 2025. The slowdown was primarily due to a downturn in electricity, gas, steam, and air conditioning supply. Sales prices also declined over the same period.

However, projections for the second quarter suggest a potential recovery in energy output, fueled by renewed activity in utility services. Still, this rebound may not translate into job creation, as companies expect further workforce reductions despite the increase in production.

Environmental sector remains stable

Activity in the environmental industry remained largely unchanged throughout the first quarter of the year. Production and employment were stable, with business focused primarily on water capture, treatment, and distribution. No major shifts are expected in the second quarter, as firms in this segment foresee continued stability in both output and staffing.

Construction sector sees moderate rebound

The construction industry recorded a moderate improvement during the first quarter, led by a rise in civil engineering and specialized construction work. In contrast, building construction remained flat. The TUC for the sector reached 72%, and most firms rated their order books as satisfactory.

Despite this progress, employment figures remained static, and 11% of companies reported supply difficulties. Financial strain also remains a concern, with 27% of construction firms reporting cash flow problems.

Expectations for the second quarter are more optimistic. Construction activity is projected to continue its upward trend, particularly in specialized work and infrastructure projects. Still, companies are not planning significant workforce expansions, indicating a wait-and-see approach amid ongoing uncertainties.

Outlook: Recovery under pressure

The HCP’s data reveal an uneven recovery across Morocco’s industrial and construction sectors. While manufacturing and construction are showing signs of improvement, supply chain issues, financial constraints, and limited job growth continue to temper momentum.

The mining sector faces headwinds tied to phosphate performance, and although the energy industry may see short-term gains, job prospects remain subdued. The environmental sector continues to provide a stable, if unremarkable, contribution to the economy.

As the second half of 2025 approaches, Moroccan businesses are cautiously navigating an environment marked by global supply disruptions, fluctuating demand, and geopolitical uncertainties. Their capacity to adapt will be critical in determining whether the tentative rebound strengthens into a sustained recovery.