The Bureau for Economic Research (BER)/Rand Merchant Bank (RMB) Business Confidence Index (BCI) fell from 47 in 1Q2026 to 39 in 2Q2026.
It has now returned to third quarter 2025 levels.
The first quarterly survey was conducted on February 28, before the Middle East conflict began. This means it was 20 points above the post-Covid low reached in the third quarter of 2023. If the post-Covid surge of 50 from 2Q2021 is removed, the 1Q2026 reading was the highest since 2015.
Increase in business confidence The first quarter partly reflected an improvement in South Africa's economic growth from 0.4% year-on-year in third quarter 2024 to 2.1% year-on-year in third quarter 2025.
Highlights of the survey
Hit The survey took place from 14 to 25 May 2026. BER said that during this period, the operating environment for companies worsened meaningfully from the first quarter survey as tensions in the Middle East escalated, leading to higher oil and fuel prices.
This also contributed to the notable change in the domestic interest rate outlook towards hikes. While markets had previously expected further easing of monetary policy, including about three 25 basis point rate cuts, attention has since shifted to the possibility of two to four rate hikes of 25 basis points.
So the decline in confidence was not unexpected.
Second Quarter Statement
BCI covers five areas. Four out of five saw a decline in the second quarter. These were the sectors that were most exposed to interest and price changes.
New vehicle dealers remained the most optimistic sector, despite declining from 67 to 49 and only 42 in the second quarter of 2025. This belief is well founded given that new vehicle sales in May 2026 increased by 12.8% year-on-year. They had their best May since 2013.
Wholesalers and building contractors were both at a neutral 50 in the first quarter, up from 42 and 39, respectively, in the fourth quarter. The Budget's focus on infrastructure investment will further boost confidence among building contractors in the coming year. This is reflected in the fact that the non-residential sector is performing better than the residential sector.
In the second quarter, building contractors' confidence dropped to 46, while wholesalers saw a decline to 40.
Retailers and manufacturers were both at 31 in the second quarter. For retailers, it was down from 36 in the first quarter. This was well below the recent peak of 54 in the fourth quarter of 2024 when the “two-pot” retirement withdrawal plan was implemented.
manufacturers was the only sector that saw improvement in the second quarter. Her first trimester reading was 30. Forward-looking investment indicators remain relatively bullish. This may be due to orders being placed ahead of the expected price increase.
Overall, the decline in the South African business confidence index in the second quarter was not as bad as expected.