A leading economic indicator, compiled by the South African Reserve Bank (SARB), fell sharply in April, pointing to weaker economic growth this year.

South Africa’s leading economic indicator is the Composite Leading Business Cycle Indicator, which is compiled and released monthly by the SARB.

It is a single forward-looking index built from ten different economic data points. The trajectory of the indicator is a useful directional indicator of South Africa’s economic growth path. If the indicator is lifting, then one can expect the economic growth rate to increase within a few months. If it is flat, then growth will remain flat. If it is falling, then the rate of growth can be expected to fall.

Yesterday, the SARB released the April 2026 reading for the indicator. It showed a decline of 1.8% month on month compared with a 1.5% increase month on month in March.

The indicator is constructed from a basket of forward-looking variables that together capture shifts in demand, production, finance, and global conditions. These include:

• •Residential building plans approved, which tracks early signals in construction and property activity;
• •New passenger vehicle sales, which reflects consumer confidence and discretionary spending;
• •A commodity-price index linked to South Africa’s main export resources, which captures external earnings conditions;
• •An index of prices of all classes of shares traded on the Johannesburg Stock Exchange, which reflects investor sentiment;
• •Job advertisements, which provides insight into hiring intentions;
• •Manufacturing order volumes, which signals future production;
• •Money supply, which tracks liquid money circulating in the economy;
• •Average hours worked in factories, which adjusts for operational pressure;
• •The interest rate spread, which reflects financial conditions and credit expectations; and
• •Leading indicators from major trading partners, which captures external demand from economies such as China, the United States, and Europe.

Economist Bheki Mahlobo told The Common Sense that the medium-term trajectory of the index was flat to down over the past three years, meaning that there was little prospect of a short-term economic growth recovery. He added that this was hardly a new insight but rather an additional piece of corroboratory evidence that South Africa’s unity government is not moving the dial on growth.

According to Mahlobo, the latest data point to South Africa remaining in its near 1% of GDP or thereabouts growth rut rather than an outright downturn or immediate recession risk. He added that the 1.8% monthly drop signals immediate pressure on domestic economic momentum, consistent with ongoing constraints including elevated global energy costs, which have pushed inflation towards the upper end of the Reserve Bank’s inflation target of 3.0% (with a one percentage point tolerance either side).

Mahlobo said he now expected South Africa to record a growth rate of 1% for 2026 compared with 1.1% in 2025 and 1.2% in 2027. South Africa’s emerging market peers are expected to grow by 4% in 2026.