The Bureau for Economic Research (BER) / Rand Merchant Bank (RMB) business confidence index (BCI) slipped to 39 in the second quarter 2026 from 47 in the first quarter 2026.
It is now back to the third quarter 2025 level.
The first quarter survey was done before the Middle East conflict started on 28 February. That meant it was a large 20 points above the post-COVID low reached in the third quarter 2023. If the post-COVID bounce of the second quarter 2021 to 50 is excluded, then the first quarter 2026 reading was the highest since 2015.
The rise in business confidence in the first quarter in part reflected the improvement in South Africa’s economic growth from 0.4% year-on-year in the third quarter 2024 to 2.1% year-on-year in the third quarter 2025.
Survey highlights
The BER survey took place from 14 to 25 May 2026. The BER said that during this period, the operating environment for firms deteriorated meaningfully from the first-quarter survey as tensions in the Middle East escalated, driving oil and fuel prices higher.
This also contributed to a marked shift in the domestic interest-rate outlook towards hikes. Whereas markets had previously expected further monetary policy easing, including around three 25 basis-point cuts, attention has since shifted to the possibility of between two and four rate hikes of 25 basis points each.
The decline in confidence was therefore not unexpected.
Second quarter details
The BCI covers five sectors. Four of the five saw a drop in the second quarter. These were the sectors most exposed to interest and price changes.
New vehicle dealers remained the most optimistic sector despite a drop to 49 from 67 and only 42 in the second quarter 2025. This confidence is well placed given that the May 2026 new vehicle sales rose by 12.8% year-on-year. They were the best May total since 2013.
Wholesalers and building contractors were both at the neutral 50 level in the first quarter from 42 and 39 respectively in the fourth quarter. The Budget focus on infrastructure investment should further boost confidence among building contractors in the year ahead. This is reflected in the fact that the non-residential sector continues to outperform the residential sector.
In the second quarter, building contractor confidence eased to 46, while wholesalers saw a drop to 40.
Retailers and manufacturers were both at 31 in the second quarter. For retailers this was a drop from 36 in the first quarter. It was substantially below the recent peak of 54 in the fourth quarter 2024 when the “two-pot” retirement withdrawal scheme was implemented.
Manufacturers were the only sector that saw an improvement in the second quarter. Their first quarter reading was 30. Forward-looking investment indicators remain relatively upbeat. This may be due to orders being pulled forward ahead of expected price increases.
Overall, the South African business confidence index slip in the second quarter was not as bad as expected.
Helmo Preuss
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