South Africa’s composite leading business cycle indicator declined by 0.3% month-on-month in May 2026, following an upwardly revised 2.0% decrease in April. This was the second consecutive monthly contraction, as weakness in five of the ten component time series outweighed improvements in the remaining five.
The latest decline was driven primarily by softer business confidence, a reduction in approved building plans for flats, townhouses and larger houses, and lower prices for South Africa’s key commodity exports. Further downward pressure came from a decrease in average hours worked per factory worker in the manufacturing sector and a narrowing of the interest rate spread between 10‑year government bonds and 91‑day Treasury bills.
These negative influences were partly offset by growth in real M1 money supply, higher new passenger vehicle sales, increased domestic manufacturing orders, a rise in job advertisements, and more favourable economic conditions among South Africa’s major trading partners.
