SA Business Confidence Edges Higher in First Quarter But Still Low

Business confidence in South Africa rose slightly in the first quarter of this year.

This is according to the latest Business Confidence Index (BCI), compiled by the Bureau for Economic Research, a think tank based in Stellenbosch. It rose to 47 points in the first quarter of 2026, up from 44 points in the fourth quarter of 2025. The increase continues the recovery seen over recent quarters and places the index well above its roughly 15-year trend level of about 38 points.

The BCI measures business satisfaction with current trading conditions and near-term expectations across five sectors including new vehicle dealers, wholesalers, building contractors, retailers, and manufacturers. The index runs from 0 to 100, with 50 representing neutral sentiment. Readings above 50 indicate that most firms are satisfied with conditions, while readings below 50 indicate that most are dissatisfied.

When looking at the sub-indexes, the strongest improvement came from new vehicle dealers, where confidence increased to 67 points from 58 points, reflecting strong demand in the motor trade (see our reporting on the latest figures around new car sales in February this year).

Building contractors also recorded a sharp rise, with confidence increasing to 50 points from 39 points and returning the sector to neutral territory. Wholesalers improved as well, rising to 50 points from 42 points.

The improvement is supported by macroeconomic tailwinds in South Africa. A stronger rand has reduced import cost pressures for businesses and improved margins, while the Reserve Bank has reduced interest rates by 150 basis points since September 2024, which has eased lending conditions. These factors have been particularly supportive for consumer-facing sectors, especially vehicle dealerships.

However, the outlook for the next quarter may face some pressure. According to Bheki Mahlobo, economics and policy editor at The Common Sense, "Business confidence could take a knock in the second quarter following the sharp rise in global oil prices, which saw Brent crude climb to $82 per barrel from about $65 at the beginning of February. However, if the Iran war risk is contained, we would expect the index to resume its modest upward trend in the third quarter."

Even so, the index remains well below its peak of 80 points recorded in the first quarter of 2007. This suggests businesses remain pessimistic about South Africa’s longer-term economic outlook, implying that the country's fixed investment level as a proportion of GDP will likely remain below 15%, trailing behind many of its emerging market peers.