Business confidence edged higher in July, supported by strong new-vehicle sales, merchandise export volumes and lower energy prices, although higher inflation and lower global precious-metal prices dampened sentiment somewhat, the South African Chamber of Commerce and Industry (Sacci) said on Tuesday.
Sacci’s business confidence index (BCI) rose 1.9 points to 125.4 in July from June, having struggled since a sharp decline in April brought on by concerns over the economic impact of the Middle East war, including steeply higher diesel and petrol prices. It was up 8.7 index points compared with July 2025.
“It appears that the negative effect caused by the soaring crude oil price in April has subsided further in July 2026. The most significant positive monthly impacts on the BCI in July were made by the number of new vehicle sales, merchandise export volumes and lower energy prices,” Sacci said.
It warned, however, that South Africa’s economic outlook remains vulnerable to the consequences of the war pitting the US against Iran, which has disrupted the flow of oil and other commodities through the key Strait of Hormuz since breaking out in late February.
Not only the inflationary impact, through higher transport costs, but also the disturbance of trade and spending patterns is impeding economic activity, the business chamber said.
The South African Reserve Bank raised interest rates by 25 basis points in May, citing inflation risks linked to the Middle East conflict. It paused in July, keeping its benchmark policy rate at 7%, but signalled it would not hesitate to tighten further if the inflation outlook deteriorated.
“Price instability from whatever source has a real effect on the economy. The process of inflation cannot be left unchecked, as the price mechanism plays an important part in the allocation process in the economy,” Sacci said.
“Therefore, the actions of the Reserve Bank to contain inflation are a necessary policy instrument to ensure the real effect of price instability is addressed.”
Other recent data has pointed to some resilience in the private sector in July.
S&P Global’s private sector-wide purchasing managers’ index (PMI), a weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases, was at 50.3 in July, signalling an improvement in business conditions from the previous month.
But the survey of purchasing managers representing about 400 private sector companies showed that the recovery remains fragile, constrained by weak demand and persistent supply chain disruptions.
Absa’s manufacturing sector PMI dipped slightly to 46.8 in July from 47.3, but underlying indicators were more positive, with improvements in new sales orders and business activity alongside easing supply-chain delays and moderating input costs.
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