For the first quarter of 2022, the manufacturing industry showed a positive trajectory, but the recent Absa Manufacturing Survey underscores the noteworthy constraints the sector underwent during the second quarter. The average for the first two months of the second quarter is almost six points below the average recorded in the first quarter.

Covered in this article:

Riding the wave
A clear concern
Shelter from the storm

Riding the wave

According to the latest Absa Purchasing Manager’s Index (PMI), the sentiment was most buoyant during March 2022 before the KwaZulu-Natal floods. Due to reduced purchasing demand and activity as a result of load shedding, the manufacturing industry stalled in June.

However, domestic demand and export sales normalised after the Durban port disruptions, signaling stable demand for South African products.

The domestic purchasing price index’s downward tick after March emulates the global trend. The PMIs for Europe and the US reveal a moderation in input cost inflation for May as raw material inflation abroad abated. But in SA, levels remain high, as global input cost pressure endures.

A clear concern

Justin Schmidt, head of the Manufacturing Sector at Absa Retail and Business Bank, reports a dampened sentiment in the manufacturing sector, and the slump in domestic and global export is worrying.

Schmidt's report emphasises the shortage of dependable energy as an impediment to growth and notes that mounting fuel costs as a result of the Ukrainian conflict make generator use less desirable.

Manufacturers’ post-pandemic recovery and growth going forward hinges on increased infrastructure investment and more rapidly implemented regulatory reform.

Shelter from the storm

Notwithstanding the economic dynamics, Astron Energy works closely with customers to navigate this challenging landscape. The various teams within the organisation cover the full end-to-end operations of customers to formulate solutions that help to mitigate downtime and to minimise the impact on customer operations. Contact us today to find out how Astron Energy can assist your business.