Sachin Chanderdhev, Sector Specialist for Manufacturing at Absa
Business confidence in the manufacturing sector came under renewed pressure during the first quarter of 2026, with lacklustre demand weighing on sentiment.
According to the Q1 Absa Manufacturing Survey, the headline index number declined by 9 index points to 30 from the previous quarter. Sales volumes, orders and selling prices all experienced substantial declines. When compared to the previous quarter, the index for Domestic Sales dropped by 14 points while Domestic Selling prices decreased by 15 points. The declines in Export Sales and Selling prices were 16 and 9 index points respectively. Domestic and Export orders dropped significantly with the indices declining 22 and 27 points respectively.
“The glimmer of hope that emerged during the last quarter of 2025 was short-lived, despite the many positive macro factors such as a stronger exchange rate, lower inflation rates and fuel prices supporting the local operating environment,” Sachin Chanderdhev, Sector Specialist for Manufacturing at Absa Business Banking says. “The findings underscore the fact that our manufacturing sector participates on a global stage and is therefore not immune to external shocks, with global players looking to redefine trading partners following the implemented tariffs and global market uncertainty. The decline in export activity experienced since last year is creating longer term strain on the sector.”
Despite ongoing demand pressures, the survey indicates that certain constraints have improved compared to the first quarter of 2025, with short-term interest rates and the general political climate improving by 5 and 6 points respectively. Encouragingly, the index for Fixed Investments in 12 months, increased by 18 points and the expectations around constraints over the next 12 months also signal the possibility of gradual improvements in the operating environment.
“Even though the operating environment remains difficult, manufacturers continue to demonstrate resilience,” adds Chanderdhev.
Conducted between 12 and 23 February 2026 in partnership with the Bureau for Economic Research (BER) at Stellenbosch University, the survey reflects feedback from approximately 700 manufacturing businesses. The confidence index ranges from 0 (no confidence) to 100 (extreme confidence).
The decrease in confidence was pervasive across all major subsectors, except for the Transport sector, which experienced an increase to a score of 26 compared to 19 in the previous quarter – though still below the long-term average. While the Food and Beverage sector, along with Transport, experienced an uptick in export sales as illustrated by a respective 15- and 13-point increase in their indices, both highlighted significantly lower selling prices. Some respondents noted that cheaper imports are impacting their sales, thus creating strain on local demand.
Chanderdhev says more manufacturers are re-thinking their energy mix to combat rising electricity tariffs, while others are looking to adopt new technologies to improve throughput and efficiency. “Unlocking efficiency, removing unnecessary cost and running lean operations are critical to remain competitive in an unpredictable operating environment.”
“In addition to investing in renewable energy, clients are also looking to improve their water security with storage, recycling and water backup solutions. These investments aim to reduce operating costs, manage infrastructure-related risks and strengthen long-term competitiveness,” Chanderdhev adds.
As the Bank of the Entrepreneur, Absa Business Banking remains committed to supporting South Africa’s manufacturing sector with a comprehensive range of financial and non‑financial solutions. Whether businesses are navigating difficult conditions, strengthening resilience, or investing in innovation, capital expansion or renewable energy projects, Absa provides customised working capital support and funding options tailored to their specific needs.
Beyond banking, Absa offers deep sector expertise and builds strong, personalised partnerships that enable businesses of all sizes to grow and succeed.
Facts Only
* The headline index declined by 9 points to 30.
* Sales volumes, orders, and selling prices all experienced substantial declines.
* Domestic Sales index dropped by 14 points.
* Domestic Selling prices decreased by 15 points.
* Export Sales index dropped by 16 points.
* Export Selling prices decreased by 9 points.
* Domestic Orders dropped by 22 points.
* Export Orders dropped by 27 points.
* Short-term interest rates improved by 5 points.
* The general political climate improved by 6 points.
* Fixed Investments in 12 months increased by 18 points.
* The survey was conducted between 12 and 23 February 2026.
* Approximately 700 manufacturing businesses were involved.
* The confidence index ranges from 0 to 100.
* The Transport sector saw an increase to 26.
* The Food and Beverage sector saw a 15-point increase.
* Cheaper imports are impacting local demand.
Executive Summary
Full Take
The article presents a picture of a manufacturing sector facing significant headwinds, primarily driven by external forces – specifically, global trading dynamics and the imposition of tariffs. The “glimmer of hope” from the end of 2025 quickly faded, revealing a deeply interconnected vulnerability, showcasing how the sector’s reliance on international markets makes it susceptible to shifts in global power and economic policy. The Steelman maneuver is evident – Absa Business Banking aggressively frames the situation not as a local problem but as a direct consequence of global forces, thereby diffusing responsibility. The pattern scan reveals a classic “motte-and-bailey” tactic, exaggerating the impact of external factors (tariffs, global uncertainty) to create a sense of overwhelming crisis, obscuring the potential for domestic policy interventions or strategic adaptations. This operates alongside a subtle appeal to authority, referencing the Bureau for Economic Research (BER) at Stellenbosch University to lend credibility to the survey’s findings.
The root cause here is a persistent struggle against systemic global economic pressures – a struggle that consistently echoes throughout the narrative. The implications are significant, highlighting the precariousness of relying on international trade without substantial domestic resilience. The focus on energy diversification and water security speaks to a reactive, defensive strategy, suggesting a lack of proactive innovation. A crucial question emerges: is this a genuine reflection of the sector's state, or a carefully constructed narrative designed to justify specific financial products and services offered by Absa? A Counterstrike scan reveals the potential for this narrative to be weaponized – amplified by media outlets that specialize in highlighting economic anxieties, creating a feedback loop of negative sentiment. The survey’s timing—February 2026—is significant; it’s a critical juncture for strategic planning and policy development. Considering the historical pattern of such sector-specific surveys, there’s an underlying question of whether the data truly represents the aggregated experience of the sector or is skewed by the selection biases of the sample.
Sentinel — Likely Human
This analysis suggests the text is likely human-written, exhibiting stylistic patterns common in business reports while relying on generalized statements and expert attribution without substantive evidence. The granular details of the survey and the individual perspective of the sector specialist provide strong indicators of a genuine, human-generated piece.