Categories
Our Voices

Our Voices

Weak domestic demand and deteriorating export activity weigh on business confidence – Q3 Absa Manufacturing

15 September 2026

Weak domestic demand and deteriorating export activity weigh on business confidence – Q3 Absa Manufacturing Survey

Business confidence in the manufacturing sector deteriorated by 4 index points from the previous quarter, declining to a score of 27, the Q3 Absa Manufacturing Survey shows.

The sector remained under pressure during the third quarter of 2026, as weak domestic demand, deteriorating export activity and persistent economic uncertainty continued to weigh on business performance.

Domestic sales remained muted for a third consecutive quarter, while export sales declined by a further 6 index points compared to the previous quarter. Domestic and export orders also retreated by 7 and 5 index points respectively, while capacity underutilisation increased, pointing to greater spare capacity in the sector. Cost pressures eased somewhat, with the total unit cost of production declining from its second-quarter spike. Selling-price indicators, however, remained elevated and increased further. Yet these positive developments were insufficient to offset prevailing negative sentiment, with general business conditions continuing to trend downward.

Conducted between 13 and 24 August 2026 in partnership with the Bureau for Economic Research (BER) at Stellenbosch University, the survey was completed by approximately 700 manufacturing businesses. The confidence index ranges from 0 (no confidence) to 100 (extreme confidence).

“The Absa survey results reiterate the challenges arising from weak demand, difficult global trading conditions and lingering uncertainty following the sharp cost shock experienced in the second quarter,” says Sachin Chanderdhev, Sector Specialist: Manufacturing at Absa Business Banking. “While inflationary pressures appear to have moderated compared to previous years, consumers and businesses continue to carefully weigh their purchasing and investment decisions. Manufacturers thrive on operational continuity and maximum plant utilisation, and this is proving increasingly difficult in an environment characterised by subdued demand and weak sales.”

The survey shows that 66% of manufacturers identified insufficient demand as a key constraint within the current operating environment. Among the major subsectors, most recorded an overall decline in business confidence, with the exception of Metals & Machinery, which posted a 6-point increase to a confidence score of 31. Despite lower confidence scores, the Chemicals and Transport subsectors recorded a significant improvement in production levels, marking an encouraging recovery following two consecutive quarters of weak output. The Textiles subsector delivered the strongest sales performance, across both domestic and export markets, while export orders also surged during the quarter.

Despite challenging conditions, the sector continued to invest selectively, with fixed investment improving by 10 index points during the quarter. This relative resilience in capital spending is encouraging, particularly against the backdrop of weak demand and subdued confidence and suggests that manufacturers are still positioning for future growth rather than simply retrenching. The survey also points to a more constructive medium- to long-term outlook. Expectations for export volumes over the next 12 months improved by 10 points, while planned investment in machinery and equipment remains positive.

“Manufacturers continue to contend with elevated input costs, including fuel, labour and raw material expenses, which place pressure on profitability and cash flow management. Yet, the sector continues to demonstrate remarkable resilience,” reflects Chanderdhev. “Investment decisions are increasingly focused on improving efficiencies, eliminating unnecessary costs and strengthening competitiveness to capitalise on future growth opportunities as demand conditions improve.”

As the Bank of the Entrepreneur, Absa Business Banking remains committed to supporting Africa’s manufacturing sector through a comprehensive suite of financial and non-financial solutions. From funding working capital requirements and capital expansion projects to financing automation, digitisation and renewable energy initiatives, Absa partners with manufacturers to strengthen resilience, improve operational efficiency and unlock sustainable growth opportunities.

Beyond banking, Absa provides specialised sector expertise and tailored support solutions, enabling manufacturers of all sizes to navigate evolving market conditions and build sustainable businesses for the future.

15 September 2026

Weak domestic demand and deteriorating export activity weigh on business confidence – Q3 Absa Manufacturing Survey

Business confidence in the manufacturing sector deteriorated by 4 index points from the previous quarter, declining to a score of 27, the Q3 Absa Manufacturing Survey shows.

The sector remained under pressure during the third quarter of 2026, as weak domestic demand, deteriorating export activity and persistent economic uncertainty continued to weigh on business performance.

Domestic sales remained muted for a third consecutive quarter, while export sales declined by a further 6 index points compared to the previous quarter. Domestic and export orders also retreated by 7 and 5 index points respectively, while capacity underutilisation increased, pointing to greater spare capacity in the sector. Cost pressures eased somewhat, with the total unit cost of production declining from its second-quarter spike. Selling-price indicators, however, remained elevated and increased further. Yet these positive developments were insufficient to offset prevailing negative sentiment, with general business conditions continuing to trend downward.

Conducted between 13 and 24 August 2026 in partnership with the Bureau for Economic Research (BER) at Stellenbosch University, the survey was completed by approximately 700 manufacturing businesses. The confidence index ranges from 0 (no confidence) to 100 (extreme confidence).

“The Absa survey results reiterate the challenges arising from weak demand, difficult global trading conditions and lingering uncertainty following the sharp cost shock experienced in the second quarter,” says Sachin Chanderdhev, Sector Specialist: Manufacturing at Absa Business Banking. “While inflationary pressures appear to have moderated compared to previous years, consumers and businesses continue to carefully weigh their purchasing and investment decisions. Manufacturers thrive on operational continuity and maximum plant utilisation, and this is proving increasingly difficult in an environment characterised by subdued demand and weak sales.”

The survey shows that 66% of manufacturers identified insufficient demand as a key constraint within the current operating environment. Among the major subsectors, most recorded an overall decline in business confidence, with the exception of Metals & Machinery, which posted a 6-point increase to a confidence score of 31. Despite lower confidence scores, the Chemicals and Transport subsectors recorded a significant improvement in production levels, marking an encouraging recovery following two consecutive quarters of weak output. The Textiles subsector delivered the strongest sales performance, across both domestic and export markets, while export orders also surged during the quarter.

Despite challenging conditions, the sector continued to invest selectively, with fixed investment improving by 10 index points during the quarter. This relative resilience in capital spending is encouraging, particularly against the backdrop of weak demand and subdued confidence and suggests that manufacturers are still positioning for future growth rather than simply retrenching. The survey also points to a more constructive medium- to long-term outlook. Expectations for export volumes over the next 12 months improved by 10 points, while planned investment in machinery and equipment remains positive.

“Manufacturers continue to contend with elevated input costs, including fuel, labour and raw material expenses, which place pressure on profitability and cash flow management. Yet, the sector continues to demonstrate remarkable resilience,” reflects Chanderdhev. “Investment decisions are increasingly focused on improving efficiencies, eliminating unnecessary costs and strengthening competitiveness to capitalise on future growth opportunities as demand conditions improve.”

As the Bank of the Entrepreneur, Absa Business Banking remains committed to supporting Africa’s manufacturing sector through a comprehensive suite of financial and non-financial solutions. From funding working capital requirements and capital expansion projects to financing automation, digitisation and renewable energy initiatives, Absa partners with manufacturers to strengthen resilience, improve operational efficiency and unlock sustainable growth opportunities.

Beyond banking, Absa provides specialised sector expertise and tailored support solutions, enabling manufacturers of all sizes to navigate evolving market conditions and build sustainable businesses for the future.