Absa Q1’24 manufacturing survey dips

The first quarter of 2024 has seen a significant dip in business confidence in the manufacturing sector, according to the APSER manufacturing survey. The survey revealed that business confidence dropped by five points to 21, which is notably lower than the long-term average of 37 points. The key factors contributing to this decline in confidence were load shedding, challenges at the ports, and political uncertainty. Justin Schmidt, the Head of the Manufacturing Sector at APSER Relationship Banking, discussed the key takeaways from the survey in an interview with CNBC Africa. According to Schmidt, load shedding remains a persistent issue for manufacturers, despite a reduction in its intensity in the fourth quarter. The inadequate supply of electricity continues to pose challenges for manufacturing operations. Additionally, logistical challenges related to ports and rail transport have made it difficult for manufacturers to obtain raw materials and distribute their products efficiently. While the supply chain constraints are not as severe as during the pandemic, they still present obstacles for the sector. The lackluster demand and production levels in the manufacturing industry were also highlighted as concerning factors in the survey. Schmidt emphasized that these constraints are impacting the sector's overall performance and growth potential. Addressing the impact of political uncertainty, Schmidt pointed out that manufacturers are facing additional challenges due to the upcoming elections. He noted that political uncertainty has historically been a constraint on the manufacturing sector, and the current environment is no exception. Some manufacturers are holding off on investments until after the elections to gauge the possible outcomes and implications for the industry. Looking ahead to the next quarter, Schmidt expressed a cautious outlook for the manufacturing sector. Manufacturers are apprehensive about the future due to concerns about the economy and policy environment. The survey indicated a drop in confidence regarding investment in fixed capital formations, such as land, property, and equipment. Schmidt highlighted the need for improvements in the infrastructure and regulatory environment to alleviate some of the pressures facing manufacturers. In conclusion, Schmidt acknowledged the challenges ahead for the manufacturing sector but remained hopeful for potential improvements in conditions such as reduced load shedding and enhanced supply chains. Despite the current difficulties, he encouraged industry players to remain resilient and adaptable in navigating the complex landscape. The first quarter APSER manufacturing survey paints a sobering picture of the state of the manufacturing sector, reflecting the multifaceted challenges that businesses are grappling with. As the industry continues to navigate volatile conditions, strategic decision-making and proactive measures will be crucial for sustaining growth and resilience.