---
title: "Reserve Bank data paint mixed picture as inflation comes knocking"
description: "The Reserve Bank’s leading business indicator edged up in August, but analysts warn us against getting too excited, as the jobs market and consumer spending patterns show we’re still feeling the heat of inflation."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "EXPLAINER"
author: "Holly Munks"
author_url: "https://www.dailymaverick.co.za/author/holly-munks/"
canonical_url: "https://www.dailymaverick.co.za/article/2026-10-29-reserve-bank-data-paint-mixed-picture-as-inflation-comes-knocking/"
published: "2026-10-29T20:03:09"
lang: "en-ZA"
word_count: 1549
---

# Reserve Bank data paint mixed picture as inflation comes knocking

> The Reserve Bank’s leading business indicator edged up in August, but analysts warn us against getting too excited, as the jobs market and consumer spending patterns show we’re still feeling the heat of inflation.

By Holly Munks · Published 29 October 2026, 22:03 SAST

## Key points
- The SA Reserve Bank’s leading business-cycle indicator rose 1.1% in August, offering a sliver of hope after July’s decline – but annual growth slowed to 1.9%.
- The mixed picture reflects stronger building approvals, factory activity and money supply, offset by weaker job adverts, vehicle sales and business confidence.
- Analysts say fuel-price shocks and geopolitical tensions are weighing on households and firms, with economic momentum likely to remain weak into early 2027.
- Vehicle demand remains resilient, but affordability is biting: economists warn elevated petrol and diesel costs could push fourth-quarter growth towards stagnation or another mild contraction.

## Content

There’s a flurry of data that washes in and out of financial news feeds every month, and it can be difficult trying to parse what the data actually tell us about the state of our country.

[New numbers](https://www.resbank.co.za/content/dam/sarb/publications/composite-business-cycle-indicators/2026/Composite%20Business%20Cycle%20Indicators%20Oct%202026.pdf) from the South African Reserve Bank (Sarb) that [track the highs and lows](https://www.investopedia.com/terms/b/bci.asp) of the corporate cycle give a snapshot of how the economy is doing by combining different metrics, like the number of building permits granted, factory hours worked, cars sold and jobs advertised.

[Read more

Minister Parks Tau revs up a transformation and localisation drive for the automotive industry

October 13, 2026 ![Image](https://cdn.dailymaverick.co.za/i/lgSts-i_dYRAvkCtZ2WwhJc48rE=/450x0/smart/file/attachments/orphans/BMTauautotransformation_510310.jpg)](https://www.dailymaverick.co.za/article/2026-10-13-minister-parks-tau-revs-up-a-transformation-and-localisation-drive-for-the-automotive-industry/)

The short version of the story goes like this: the Sarb’s composite leading business cycle indicator for August ticked up by 1.1% on a monthly basis, after falling 0.8% in July. Still, when compared with a year earlier, growth slowed a little, rising by only 1.9% annually in August, after rising 2.3% in July.

“The composite business cycle indicators can be somewhat volatile on a month-to-month basis depending on the behaviour of their component time series,” explained Kgopotso Moagi, an economic statistician at the Reserve Bank. “The Sarb thus considers the overall trend rather than the month-to-month changes when interpreting the indicators.”

### **Crunching the numbers**

But what does this all mean? In August, more residential building plans were approved, and there was a marginal rise in the average hours worked per factory employee.

Prices for the main commodities that SA exports contributed growth of 0.3% to the broader indicator, and the real M1 money supply was up 0.7% on a smoothed six-month basis.

If that sounds a bit opaque, you’re not alone. M1 money supply is a way of measuring [the “most liquid” forms](https://www.investopedia.com/terms/m/m1.asp) of things like cash, demand deposits and checkable deposits. When M1 moves up or down, it can filter through to everyday shopping, because having a greater supply of money in circulation can push prices.

[“Smoothed” rates](https://ec.europa.eu/eurostat/statistics-explained/SEPDF/cache/17672.pdf?v=4948745689355594) usually apply to data based on weighted averages, where outliers on either end of the spectrum offset each other.

On that note, the smoothed six-month rate for job postings in the Sunday Times and Pnet was down about 0.3%, and sales of new passenger vehicles dropped 0.1% on a smoothed six-month basis.

Meanwhile, Stellenbosch University’s Bureau of Economic Research Business Confidence Index (basically a corporate vibe-check that the Sarb factors into its calculations) edged down.

Overall, a mixed bag.

![BM-Ed/MPC](https://cdn.dailymaverick.co.za/i/gVI-dfEvvM8YTuXgFkzCcsrdEgE=/200x100/smart/filters:strip_exif\(\)/file/attachments/2984/GettyImages-997732698_419946_42cd5c8922ce11facd7b819b0fbc259e.jpg)

*SA Reserve Bank governor Lesetja Kganyago. (Photo: Waldo Swiegers / Bloomberg via Getty Images)*

### **Digging deeper**

Moagi told Daily Maverick that the data confirms what most of us have been feeling, which is that things have been moving in a negative direction over the past few months, as businesses and consumers contend with spiking inflation.

> “While the composite leading business cycle indicatorincreased on a month-to-month basis in August 2026, the indicator generally trended downwards since peaking in March 2026. This suggests that South Africa’s economic growth momentum could remain weak in the near term. The main driver of this is likely the negative impact of geopolitical tensions on fuel prices, logistical operations, and overall economic activity.”

Meanwhile, the composite coincidentindicator, an aggregate that moves with the business cycle, rose 0.6% in July.

Moagi explained that this “suggests that economic activity likely improved in July 2026, which was supported by increased industrial production and purchasing activity in the trade industry (retail, wholesale and motor trade sales)”.

[Media: "Chart: Passenger car sales surged 11.6% in August 2026 — the 23rd straight monthly gain"](https://charts.dailymaverick.co.za/chart/fd73208aef876cd15a42a1b1)

“However, the composite coincident business cycle indicator has been trending downwards in recent years, largely hampered by the downward trend in industrial production and formal non-agricultural sector employment,” Moagi continued.

“Therefore, while domestic activity improved in July 2026 when compared with June, it has been relatively weak in recent years.”

The lagging indicator, which more or less verifies the trends forecast by the leading indicator, also reflected “uncertainty and cost pressures from persistent geopolitical tensions”.

### **The more you know**

Of course, the business cycle indicator is not the be-all and end-all of economic indicators, and some analysts question how helpful the measure is when it comes to things like predicting GDP.

“Modelling from Codera Analytics shows that these commonly used advanced indicators of GDP for South Africa [do not have high correlations with GDP](http://google.com/url?q=https://codera.co.za/sa-leading-indicators-are-not-good-leading-indicators/&sa=D&source=docs&ust=1793113342019352&usg=AOvVaw1T6KlxcVQkUEYZUh84RNyM) contemporaneously, or with future values of GDP,” Codera CEO Daan Steenkamp told Daily Maverick.

> “Our results suggest that many of the macroeconomic variables considered by analysts as leading indicators do not provide good signals of GDP growth or developments in the South African business cycle. Instead, our research shows that using a large number of indicators together produces substantially better business cycle predictions - especially when using machine learning techniques.”

![(Source: Codera)](https://cdn.dailymaverick.co.za/i/keLRrE_TA4nHEBsJaRh1cIuDxy4=/200x100/smart/filters:strip_exif\(\)/file/attachments/2999/CoderaCorrel26_292432.png)

The number-crunching reveals that the car sales trend from earlier is an interesting one to pick out.

Though the indicator showed that new passenger car sales dragged slightly on a six-month basis, year-to-date sales are up, according to the Automotive Business Council (Naamsa).

[Naamsa reported](https://naamsa.net/wp-content/uploads/2026/09/20260901-Flash-Report-August-2026.pdf) that local sales of passenger cars in August were about 12% ahead of the level seen a year before, and in the eight months ended in August, were up nearly 14%. [Vehicle SA data](https://vehiclesa.co.za/market-data/sales) suggest that four of the top five brands – Toyota, Volkswagen, Ford and Hyundai – sold more passenger vehicles in August of this year than August 2025.

However, Suzuki, which has the second-highest market share of a little more than 11%, saw sales fall about 0.4% from the prior year. Nissan, Stellantis (which is yet to break ground on the land it staked out in Coega), MG, Daimler Truck, Jaguar Land Rover and Subaru sales also dropped in August.

The latest industry [report from](https://www.cars.co.za/motoring-news/cars-co-za-industry-report-2026/358484/)[Cars.co.za](http://Cars.co.za) asserted that demand for new vehicles is still strong, highlighting that this past July, “passenger vehicle sales hit their highest monthly level since September 2014”. However, as the report explained, “affordability, not appetite, is now the constraint”.

According to the report, about 53% of consumers said they have cut discretionary spending over the past three months. Interestingly, it also noted that fewer people are applying for car loans, compared with the proportion seeking out other personal loans or “buy now, pay later” credit options.

Alan Quinn, chief innovation and product officer at [Cars.co.za](http://Cars.co.za), told Daily Maverick that there is a growth in interest in NEVs \[new energy vehicles\] based on search impressions, but conversion still lags in terms of actual leads.

![The new The BMW X3 30e xDrive is a plug-in electric vehicle which has an electric range of 81–90km, after which the vehicle switches over gasoline-powered engine for continued operation. (Photo: BMW Group)](https://cdn.dailymaverick.co.za/i/zn_HTSxRmViBz96IXU5L8tf5K9A=/200x100/smart/filters:strip_exif\(\)/file/dailymaverick/wp-content/uploads/2025/03/Charging.jpg)

*South African consumers are showing growing interest in new energy vehicles. (Photo: BMW Group)*

“So what that shows is there’s growing interest in NEVs or the consideration of NEVs, but ultimately there’s still a lot of people who feel like they're not quite ready,” he said

> “And then on the other hand… the bigger car, the luxury vehicle in the mix increasingly seems to be the preference \[for\] a rugged vehicle like a large double cab or a Land Cruiser Prado or something. So it’s not as simple as in the old days where people would go, ‘Okay, I’m buying a German luxury car’.”

The car data doesn’t touch on the touchy subject of fuel prices, which as we all know, are looking [pretty ugly](https://www.dailymaverick.co.za/article/2026-10-05-south-africa-petrol-price-hike-above-r30-per-litre/?dm_source=blocks-horizontal&dm_medium=card-link&dm_campaign=inform&dm_position=5) right now.

[Media: "Chart: A Middle East oil shock pushed the SARB's own inflation forecast up by more than a third"](https://charts.dailymaverick.co.za/chart/826eedd1c0754916ea9548c3)

The Sarb has already acknowledged our anxiety, raising its inflation forecast and bumping interest rates up to 7.25% from 7.00% [last month](https://www.dailymaverick.co.za/article/2026-09-24-economic-fire-interest-rate-adjustment-makes-for-interesting-braai-chat/).

### **Look on the bright side?**

Lerato Ntuli, an economist at Anchor Capital, saw the data for August as “encouraging”, though she acknowledged that fuel costs remain the dark cloud on our economic horizon.

“The July/August average remains around 1% below the second-quarter average, and given the indicator’s roughly six-month lead, it suggests subdued growth momentum into early 2027,” said Ntuli.

“Growth looks set to remain weak, though the indicator does not signal a sustained downturn.

> “The composition reflects this year’s fuel-price shock. The main support came from real money supply growth and building plan approvals, while the components most closely tied to household demand and employment – new vehicle sales and job advertisements – were the largest drags. Manufacturing orders and business confidence also weakened.”

![Petrol price another increase on the way](https://cdn.dailymaverick.co.za/i/R-eDD7_CUPmYD6mAKZVwM4XzTNA=/200x100/smart/filters:strip_exif\(\)/file/attachments/orphans/Iman-OctoberFoodBasket2_414699.jpg)

*Fuel costs remain the dark cloud on our economic horizon. (Photo: Sharon Seretlo / Gallo Images)*

She explained that the pressure on households has been uneven. The cost-of-living squeeze has been concentrated in fuel and transport, while food inflation has fallen to around 1% in recent months.

“That has been an important buffer, and it helps explain why spending has held up better than the fuel shock alone would suggest... I’d expect third-quarter GDP to return to positive territory after the second-quarter contraction,” Ntuli continued.

But the greater risk lies in the fourth quarter (we’re currently in it). Petrol prices hit record levels in October, and the fuel levy relief has largely prevented a further increase without delivering meaningful relief at the pumps.

“Food inflation pressures are emanating and diesel costs typically filter through to food prices with a lag,” she continued, adding that if it happens while fuel costs stay elevated, households face a broader squeeze on disposable income, and fourth-quarter growth close to stagnation, with the risk of another mild contraction.

Sentiment-wise, we may be in something of a slump. Let’s hope what goes down must also come up – and that the thing coming up again is not inflation. **DM**