Confidence among SA manufacturers has dipped, but still remains at higher levels than the same period last year. Picture: Supplied
Image: Supplied
Geo-political tensions caused South African manufacturing confidence to dip in the first quarter of 2025, after reaching a two-year high during the previous quarter.
Despite renewed confidence felt at the beginning of the year, the latest Absa Manufacturing Survey saw the confidence index fall by 2 points to 34 (out of 100) in the first quarter as local and global uncertainties weighed on sentiment.
Not surprisingly, the indicators that measure political climate as well as business conditions, each deteriorated by 17 points, the survey revealed.
It cited a combination of international and local factors contributing to the dip in confidence. Of key significance, tariff increases in the United States and the widely expected cancellation of the African Growth and Opportunity Act (AGOA) agreement have started to weigh on manufacturers.
On the local front, the sudden reintroduction of load shedding as well as the postponement of the Budget Speech and the proposed electricity tariff increases have added to the uncertainty.
The biggest contributors to the overall drop in confidence were the chemicals as well as the metals & machinery subsectors, with the latter dropping sharply from 41 points to 29, possibly driven by the Mittal closures.
The food & beverage and transport subsectors, on the other hand, showed notable improvements in sentiment, rising by 6 points and 14 points respectively.
Ultimately, though, sentiment in the manufacturing sector appears better than it was at the beginning of 2024.
"Compared to the averages for 2024, most indicators for Q1 2025 show an improvement, suggesting that manufacturing conditions could be better than last year," said Justin Schmidt, Executive for Manufacturing Sector at Absa Business Banking.
"Despite constraints such as raw material shortages, and lower local demand, the outlook is better than the same period last year."
In addition, manufacturers are indicating more willingness to invest in fixed assets, and there is an expectation of greater export volumes during this year.
The survey, conducted by the Bureau for Economic Research (BER) at Stellenbosch University, involved around 700 businesspeople from the manufacturing sector.
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