July unrest causes dip in manufacturer confidence

The country's manufacturing sector saw a dip in confidence according to Absa's third-quarter survey. The survey revealed that business confidence fell by five points to reach 41 for the quarter. This decline was largely attributed to the unrest that took place in July in Houghton and Kwa Zulu Natal. Justin Schmidt, the Head of Manufacturing Sector at Absa Retail and Business Bank, provided insights into the survey's findings during an interview on CNBC Africa. Schmidt highlighted that the combination of the unrest, low consumer spending, and increased lockdown restrictions due to COVID-19 were key factors contributing to the drop in confidence. The survey also revealed that political concerns played a significant role in muting confidence levels among manufacturers. While confidence levels dropped across all sectors, some industries, such as furniture, were particularly pessimistic with an index of zero, indicating that 100% of the industry was concerned about current conditions. On a positive note, Schmidt mentioned that there were some recovery signals in the survey. Forward-looking indicators showed that conditions were expected to improve, with improvements in selling prices, exports, and imports. Additionally, the survey showed an increase in investment in inventory, signaling manufacturers' confidence in potential future sales. As the country enters the final quarter of the year and approaches the peak season, the hope is that these positive signals will translate into actual improvements in the sector.