While the manufacturing sector remains under significant pressure, improved sentiment may signal a glimmer of hope for the future.
According to the Q4 Absa Manufacturing Survey, business confidence rose by 16 index points from the third quarter to 39 points. While still weaker compared to the fourth quarter of 2024, respondents cited an increase in domestic sales, improving domestic and export orders as well as an uptick in production capacity as positives.
Meanwhile, selling prices held up while the total cost of production per unit has reduced, illustrated by a significant decline in the index from 61 points to 47 points quarter-on-quarter.
“Following a challenging year for manufacturers underpinned by significantly constrained demand, it is encouraging to see some of the key indicators turn and allow manufacturers to adopt a more positive forward-looking view,” says Sachin Chanderdhev, sector specialist for manufacturing at Absa Business Banking.
“Another interest rate cut, a well-received medium term budget speech, South Africa’s removal from the Financial Action Task Force grey list and the S&P credit rating upgrade are some of the key developments that impacted sentiment during the quarter.”
Conducted between 10 and 24 November 2025 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).
Respondents within the Chemicals, Wood and Metals industries made the biggest contribution to the overall positive shift with respective confidence scores of 62, 56 and 33.
On the other hand, Food & Beverages and Transport resulted in a slight drag on the overall sentiment with their confidence scores declining by 3 and 18 points, respectively.
Manufacturers of Consumer, Intermediate and Capital Goods all demonstrated an improvement in business confidence scores this quarter.
The indicator for ‘Export Sales realised’ declined overall and within most of the subsectors – thus still illustrating a volatile global trading landscape, even as orders improved slightly.
With regards to local demand, Chanderdhev notes that if the prevailing economic conditions can be sustained, there should be an improvement in consumer demand, and this would bode well for business confidence.
That said, the latest Absa Purchasing Managers’ Index (PMI) offers a cautionary counterpoint: the headline index fell sharply by 7.2 points to 42 in November, signalling a renewed contraction in manufacturing activity, with both business activity and new sales orders deteriorating meaningfully.
While the lift in confidence in the quarterly survey is welcome and likely reflects manufacturers anticipating a more supportive environment ahead, this optimism will need to be validated by a sustained recovery in production and demand to drive sentiment higher from here.
With regards to investments into energy resilience measures, Chanderdhev notes that the increasing burden of rising electricity costs for manufacturers continues to spark a need to re-evaluate their energy supply mix towards renewable sources.
“While manufacturers continue to build resilience into their operations, it is significant to observe the positive sentiment towards fixed investment into machinery and equipment over the next 12 months, as this should result in new capacity and/or increased efficiencies within the sector,” he says.