Sachin Chanderdhev, Sector Specialist for Manufacturing at Absa
Enterprise confidence within the manufacturing sector got here beneath renewed strain throughout the first quarter of 2026, with lacklustre demand weighing on sentiment.
In accordance with the Q1 Absa Manufacturing Survey, the headline index quantity declined by 9 index factors to 30 from the earlier quarter. Gross sales volumes, orders and promoting costs all skilled substantial declines. When in comparison with the earlier quarter, the index for Home Gross sales dropped by 14 factors whereas Home Promoting costs decreased by 15 factors. The declines in Export Gross sales and Promoting costs have been 16 and 9 index factors respectively. Home and Export orders dropped considerably with the indices declining 22 and 27 factors respectively.
“The glimmer of hope that emerged over the past quarter of 2025 was short-lived, regardless of the numerous optimistic macro components comparable to a stronger alternate fee, decrease inflation charges and gasoline costs supporting the native working setting,” Sachin Chanderdhev, Sector Specialist for Manufacturing at Absa Enterprise Banking says. “The findings underscore the truth that our manufacturing sector participates on a world stage and is due to this fact not proof against exterior shocks, with international gamers seeking to redefine buying and selling companions following the applied tariffs and international market uncertainty. The decline in export exercise skilled since final 12 months is creating long term pressure on the sector.”
Regardless of ongoing demand pressures, the survey signifies that sure constraints have improved in comparison with the primary quarter of 2025, with short-term rates of interest and the final political local weather bettering by 5 and 6 factors respectively. Encouragingly, the index for Fastened Investments in 12 months, elevated by 18 factors and the expectations round constraints over the following 12 months additionally sign the potential of gradual enhancements within the working setting.
“Though the working setting stays tough, producers proceed to display resilience,” provides Chanderdhev.
Carried out between 12 and 23 February 2026 in partnership with the Bureau for Financial Analysis (BER) at Stellenbosch College, the survey displays suggestions from roughly 700 manufacturing companies. The boldness index ranges from 0 (no confidence) to 100 (excessive confidence).
The lower in confidence was pervasive throughout all main subsectors, apart from the Transport sector, which skilled a rise to a rating of 26 in comparison with 19 within the earlier quarter – although nonetheless under the long-term common. Whereas the Meals and Beverage sector, together with Transport, skilled an uptick in export gross sales as illustrated by a respective 15- and 13-point enhance of their indices, each highlighted considerably decrease promoting costs. Some respondents famous that cheaper imports are impacting their gross sales, thus creating pressure on native demand.
Chanderdhev says extra producers are re-thinking their power combine to fight rising electrical energy tariffs, whereas others want to undertake new applied sciences to enhance throughput and effectivity. “Unlocking effectivity, eradicating pointless price and operating lean operations are crucial to stay aggressive in an unpredictable working setting.”
“Along with investing in renewable power, purchasers are additionally seeking to enhance their water safety with storage, recycling and water backup options. These investments intention to scale back working prices, handle infrastructure-related dangers and strengthen long-term competitiveness,” Chanderdhev provides.
Because the Financial institution of the Entrepreneur, Absa Enterprise Banking stays dedicated to supporting South Africa’s manufacturing sector with a complete vary of monetary and non‑monetary options. Whether or not companies are navigating tough situations, strengthening resilience, or investing in innovation, capital growth or renewable power tasks, Absa supplies customised working capital assist and funding choices tailor-made to their particular wants.
Past banking, Absa presents deep sector experience and builds sturdy, personalised partnerships that allow companies of all sizes to develop and succeed.
