The Bureau of Economic Research’s (BER) latest survey showed business confidence climbing further in the first quarter of 2026 as last year’s rate cuts and an encouraging State of the Nation Address (Sona) put sentiment on a firm footing.
The RMB/BER business confidence index ticked up by three points to 47 in the first quarter, building on a five-point improvement in Q4, taking the confidence reading six points above its long-term average.
Excluding a spike in post-Covid sentiment in 2021, Q1’s was the highest figure since 2015, said the BER.
The survey, which took place between February 12 and 23, points to a “generally well-received” Sona and the run-up to a much smoother National Budget Review.
This year’s budget talks marked a substantial improvement over last year, when the speech’s last-minute postponement over a proposed two percentage point VAT hike brought into question the stability of the government of national unity (GNU).
While any shifts after the budget fell outside the BER’s survey window, such shifts “would, on balance, likely have supported sentiment,” it said.
Added to this was a “meaningfully more supportive interest-rate environment” compared to the last quarter of 2025.
A weakening dollar and declining local bond yields are both contributing to this environment, with the rand 7% stronger against the greenback compared to in Q4, bringing down costs of imported goods.
The SA Reserve Bank’s repo rate, meanwhile, remains 100 basis points (bps) below its level a year ago, while the 10-year government bond yield is about 100bps lower over the same period.
RMB chief economist Isaah Mhlanga said the Q1 numbers were encouraging, suggesting “we may well see a rebound in capital expenditure” this year.
But the improvements in sentiment were not broad-based, with manufacturers remaining under pressure from weak demand conditions.
Manufacturers were the laggards in the latest index, with confidence dropping by nine points to 30, partially reversing an uptick at the end of 2025.
“There is a risk that the recovery is becoming less balanced,” said Mhlanga.
“Manufacturers are particularly sensitive to overall demand dynamics, and their subdued confidence suggests that improved sentiment elsewhere has not yet translated into stronger domestic demand.”
Earlier this week, Absa’s purchasing managers index for February also saw activity in the manufacturing sector return to contractionary territory, pointing to stubborn economic headwinds in the sector.
It suggests that manufacturers, which make up about 13% of the country’s GDP, were still too cautious about their outlook to increase investment or hire new workers in the near term.
Stats SA’s fourth quarter GDP figures, set for release next week, will confirm whether the gains in business confidence in Q4 and Q1 have translated into faster economic growth.
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