Rising electricity costs, growing competition from cheaper imports and challenges within the steel industry impacted producer sentiment.
Despite a notable increase in sales and production activity in some manufacturing subsectors, the Absa Manufacturing Survey for the third quarter of 2025 has revealed that overall business confidence remains under severe pressure.
The survey released on Tuesday shows that business confidence dropped by 10 points to 23, its lowest level since the first quarter of 2024.
The Absa Manufacturing Survey is a quarterly report that assesses business confidence within South Africa’s manufacturing sector, conducted in partnership with the Bureau for Economic Research (BER).
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Manufacturer confidence drops
The third-quarter survey was conducted between 6 and 25 August 2025. The feedback is based on 700 manufacturing businesses. The confidence index ranges from 0 (no confidence) to 100 (extreme confidence).
It found that manufacturers of consumer and capital goods within industries such as transportation, food and furniture recorded meaningful improvements in sales and production activity.
However, manufacturers of intermediate goods, including inputs used in the metals sector, reported significant declines in confidence levels.
Why did manufacturer’s confidence drop?
Sachin Chanderdhev, sector specialist for manufacturing at Absa Business Banking, stated that the impact of US tariffs, the ongoing reconfiguration of supply chains and geopolitical tensions had an impact on manufacturer confidence during the quarter.
“Rising electricity costs, growing competition from cheaper imports and challenges within the steel industry also impacted producer sentiment.”
Despite this, local manufacturers demonstrated resilience, with encouraging improvements across key indices.
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Domestic and export sales
He added that domestic and export sales improved by 25 and 9 index points, respectively, and the overall production index increased by 14 points.
Similarly, new domestic and export orders increased by 18 and 8 index points, respectively, suggesting manufacturers are preparing to meet expected demand with interest rate cuts and seasonal peaks.
“A notable improvement in sentiment was recorded in the transport subsector, where confidence surged by 34 points (from 3 in Q2), supported by stronger new sales orders. “While this rebound seems somewhat counterintuitive, it was likely driven by some front-loading of orders ahead of the full tariff impact.”
Challenges experienced
Chanderdhev highlighted that despite the challenging environment, a few encouraging developments have emerged.
“A stronger rand, declining oil prices, a further 25-basis point interest rate cut, improving consumer confidence, favourable credit conditions and a steady recovery in disposable income have helped ease demand-side pressures for manufacturers.
“The factors gave rise to a healthy increase in confidence, sales and orders received within the consumer goods sector.”
Despite these positive signs, the survey highlights significant risks over the next 12 months. Expectations for business conditions, trade volumes and investment remain weak, and global demand seems fragile.
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