Zimbabwe's manufacturers entered 2026 with a curious contradiction: businesses became more confident about the months ahead even as their assessment of production deteriorated sharply.

The latest Zimbabwe National Statistics Agency (ZIMSTAT) Business Tendency Survey shows that the manufacturing confidence index rose from 5.6 in the fourth quarter of 2025 to 6.2 in the first quarter of 2026. At the same time, the manufacturing Purchasing Managers' Index (PMI) fell from 43.5 to 39.2, moving further below the 50-point level that separates expansion from contraction.

The difference becomes even clearer in businesses' assessment of production. The manufacturing production balance fell from a positive 5.0 percentage points in the final quarter of 2025 to negative 19.1 percentage points in the first quarter of 2026.

In other words, manufacturers were more optimistic about the future while reporting a much weaker production environment in the opening quarter of the year.

The production deterioration was not confined to one part of the manufacturing sector.

Drinks, tobacco and beverages recorded one of the sharpest reversals, with its production balance falling from positive 36.4 percentage points in the fourth quarter to negative 56.5 percentage points in the first quarter.

Textiles and ginning moved from positive 6.3 percentage points to negative 40.0 percentage points, while clothing and footwear fell from positive 11.1 percentage points to negative 29.6 percentage points.

The repairs of machinery and equipment category recorded another steep reversal, from positive 10.0 percentage points to negative 55.6 percentage points. Wood and furniture also deteriorated, moving from negative 6.5 percentage points to negative 35.0 percentage points.

The figures suggest that the weakness in manufacturing was broad-based rather than being driven by a single industry.

Businesses also reported several constraints that help explain why production remained weak. Insufficient demand, cash-flow difficulties and uncertainty in the economic environment were among the major constraints identified by manufacturing companies.

That helps put the production figures into context. A factory can have the capacity to produce goods but still operate below potential if orders are weak, working capital is limited or businesses are uncertain about the economic environment.

The survey's capacity-utilization figure also points to substantial unused productive capacity. ZIMSTAT's survey measured manufacturing capacity utilization at around half of available capacity in the quarter, underlining the gap between what factories could potentially produce and what they were actually producing.

Yet the rise in the confidence index complicates the picture.

The confidence index is forward-looking. It reflects businesses' expectations around factors including production, order books and stocks of finished goods. A rise in the index therefore does not necessarily mean that factories produced more during the quarter. It can instead indicate that companies expect conditions to improve in the period ahead.

That distinction is important.

The Q1 figures therefore do not necessarily show that manufacturers are contradicting themselves. Rather, they show a sector that was experiencing weak current activity while retaining some optimism about what comes next.

For Zimbabwe's manufacturing sector, the question is whether that optimism will eventually translate into higher production.

If demand improves and businesses gain access to sufficient working capital, manufacturers could increase output without necessarily requiring an immediate expansion of their existing production capacity. But if demand remains weak and cash-flow constraints persist, higher confidence may not be enough to lift factories towards full utilization.

The first quarter data therefore presents a more complicated picture than a simple manufacturing recovery story.

Manufacturers were more confident than they had been at the end of 2025, but their reported production performance moved sharply in the opposite direction. The gap between those two indicators provides an important test for the rest of 2026: whether improving expectations will eventually show up in actual factory output.

For now, Zimbabwe's manufacturing sector appears to be in a position where confidence has improved faster than production.