Manufacturing sentiment remained resilient in the second quarter of 2026 despite worsening operating conditions, ongoing supply chain disruption and mounting cost pressures, according to the latest Q2 Absa Manufacturing Survey.
Business confidence in South Africa's manufacturing sector edged up by one index point to 31 during the quarter, making it the only major sector surveyed by the Bureau for Economic Research (BER) to record an improvement.
The improvement was notable given the nine-point decline recorded in the previous quarter and the heightened uncertainty created by geopolitical tensions and supply chain disruption, particularly in the Middle East, Absa Business Banking manufacturing sector specialist Sachin Chanderdhev told Freight News.
"The sentiment is there, but it remains a tough environment to operate in," he said.
The increase in confidence was driven largely by the speed at which manufacturers responded to emerging risks, Chanderdhev said.
"They've spotted what's happened. We're so heavily accustomed to curveballs being thrown and shocks in the market that they know how to find a way through a tough situation."
Many manufacturers moved quickly to renegotiate pricing with customers, adjust inventory strategies and prepare for potential supply chain disruptions, helping to support confidence despite worsening business conditions, he said. Manufacturers also reviewed their inventory strategies, increasing raw material stock holdings where necessary to reduce the risk of shipping and logistics delays.
The apparent disconnect between rising confidence and deteriorating operating conditions reflected the fact that manufacturers had achieved better sales, stronger selling prices and some support from export markets, while the broader operating environment remained extremely challenging, Chanderdhev said.
"The conditions are tough. We're fairly upbeat because we've got better sales, better selling prices and some good returns from export markets, but generally it's still a difficult environment for us to operate in," he said.
Despite the slight uptick in confidence, manufacturers were being forced to build additional buffers into their operations as they grappled with rising raw material costs, ongoing shipping uncertainty, higher crude oil prices and a weaker rand, all of which were placing significant pressure on margins and working capital requirements, Chanderdhev said.
