South African business confidence remained subdued in the third quarter of 2026, with the RMB/BER Business Confidence Index (BCI) slipping by one point to 38, underscoring the persistent strain facing companies despite some easing in input-cost pressures.
The latest reading means that 62% of businesses surveyed remain dissatisfied with prevailing business conditions. It also leaves confidence below its long-term average of 40 and well off the 47 recorded in the first quarter, when sentiment was buoyed by improving economic conditions.
The survey, conducted between 13 and 24 August, suggests that the sharp deterioration in confidence seen in the second quarter has stabilised rather than been reversed.
“The latest result suggests the sharp eight-point decline in confidence recorded in the second quarter has neither deepened nor been reversed,” the RMB/BER Index said.
The subdued reading comes despite some relief from the immediate pressures created by the earlier oil and fuel price shock. Inflation moderated during the survey period, while the South African Reserve Bank kept its policy rate unchanged in July after raising it 25 basis points in May.
But these improvements have yet to translate into a meaningful recovery in demand or business activity.
RMB chief economist Isaah Mhlanga said some of the acute pressures that weighed on sentiment in the second quarter had eased, particularly input costs. However, businesses remain constrained by weak demand and uncertainty over both the global environment and domestic operating conditions.
“Some of the acute pressures that weighed on sentiment in the second quarter have eased, particularly input costs. However, this has not yet translated into a broad improvement in demand or activity,” Mhlanga said.
Manufacturing was among the biggest drags on overall sentiment, with confidence falling four points to 27 — the lowest level of the five sectors surveyed and well below its long-term average.
The deterioration highlights the difficulty manufacturers continue to face in converting lower cost pressures into stronger production and sales.
Domestic sales remained weak, export volumes deteriorated amid weaker global growth, and seasonally adjusted production declined during the quarter.
North West University Business School economist Professor Waldo Krugell said the latest reading was consistent with other high-frequency indicators showing that conditions remained difficult, particularly in manufacturing.
He said the impact of the fuel-price shock on domestic demand was increasingly visible in business confidence.
“There’s still a little bit of confidence left in retail,” Krugell said, but the broadly unchanged headline index showed that the shock to domestic demand had been significant.
The largest sectoral decline came from new vehicle dealers, where confidence plunged 11 points to 38.
While sales volumes of new vehicles improved, this was largely offset by declining used-vehicle sales. The survey suggests the deterioration in sentiment was less about an outright collapse in current sales and more about growing concerns over the sustainability of demand.
Retailers were the notable exception - their confidence jumped nine points to 40, bringing it back to its long-term average.
Building contractors and wholesalers, meanwhile, each recorded a one-point decline, to 45 and 39 respectively.
The construction results point to increasing pressure in non-residential building activity, including signs of weaker government-related project activity.
Among wholesalers, consumer-goods businesses reported an improvement in sales, while non-consumer-goods wholesalers experienced a meaningful deterioration — suggesting consumer-facing demand has held up better than business-to-business activity.
Expected business conditions improved from the particularly weak second-quarter reading.
Investec chief economist Annabel Bishop said South African business confidence had been depressed since the Global Financial Crisis in 2008. Confidence had improved from the fourth quarter of 2024 through the first quarter of 2026, but that recovery has lost momentum.
Bishop added that forward-looking business conditions remained “very depressed”, although they improved from -24 to -16.
yogashen.pillay@nationalmg.co.za