Business confidence in retailers and wholesalers fell sharply in the third quarter, according to the latest survey by the Bureau for Economic Research (BER) suggesting that consumer demand is starting to ease after a period of steady growth.
The BER said retail confidence dropped to 32% in the third quarter from 42% in the second quarter, falling below the long-term average of 40% for the first time in a year. Still, overall profitability in the sector remained steady with most activity measures closer to their long-term averages.
Confidence in wholesalers also dropped, falling from 50% to 38% after five quarters of above average records. The BER said that while reported business conditions improved slightly they remained below the long-term average. In contrast, confidence in new-vehicle dealers increased 12 points to 54%, the highest level recorded since 2022.
“Sentiment brightened despite a slowdown in volume growth and a decline in business conditions. On balance, the motor trade survey indicates a favourable operating environment for new vehicle dealers but also appears to be signalling that activity has reached its peak and is likely to lose some steam going forward. This coincides with what is probably the end of the SA Reserve Bank’s current interest rate cutting cycle,” it said.
It was previously reported that new-vehicle sales are on an upward trend, with August 2025 seeing a year-on-year increase of 18.7% to 51,880 units sold after a surge in July when the numbers reached 51,383 units, the highest figure recorded since 2019.
The BER said that while retailers’ confidence had been strong over the past year, it is now moving in the opposite direction. Retail and wholesale volume growth likely slowed in the third quarter, as earlier boosts to consumer spending, including two-pot withdrawals and low inflation, provide less support.
“This is an expected outcome as many tailwinds to consumer spending over the last few months, two-pot withdrawals and low inflation are set to provide less support in the second half of 2025,” it said.
“On the upside, new-vehicle dealers and furniture retailers remain a bright spot amid an otherwise gloomy trade sector. This indicates some resilience prevailing in consumer spending, particularly from higher-income consumers.”
Retail recorded a real-term increase of 5.6% year on year in July, supported by a 10% rise in textiles, clothing, footwear and leather goods, according to Stats SA. July 2024 had seen a 3.4% monthly decline, which partly influenced this growth.
Investec said that while higher take-home pay, low inflation and interest rate cuts support household spending, overall retail confidence remains subdued, particularly among lower and middle-income consumers. Pockets of strength persist among higher-income households, with real wages expected to rise for a second consecutive year and CPI inflation projected at 3.2% for 2025.
Data from NielsenIQ’s state of the retail nation report shows traditional trade outlets including spazas, independent superettes and taverns recorded faster growth than modern trade channels in the first half of the year. Traditional trade sales increased 14.8% in value and 16.4% in volume year on year, while modern trade channels, including supermarkets, franchised grocery stores and e-commerce platforms, grew 5.1% in value and 2.1% in units.
The report said consumers spent more than R324.4bn on fast-moving consumer goods in the first six months, up 7.4% in value and 7.2% in units.
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