The South African Reserve Bank’s (SARB) leading indicator was up 6.4% year-on-year in February 2026.
The SARB leading indicator has been rising since April 2024. The February 2026 year-on-year increase was the highest since October 2021.
Positive monthly components
The monthly increase of 0.5% in February was broad-based as 7 of the 10 available component time series had a positive impact.
The largest positive contributors were increases in the number of residential building plans approved and South Africa’s US-dollar denominated export commodity price index.
The other positive factors were the RMB/BER Business Confidence Index, the number of new passenger vehicles sold (six-month smoothed growth rate), and average hours worked per factory worker in manufacturing.
In addition, the percentage change over 12 months of the composite leading business cycle indicator for South Africa’s major trading-partner countries had a positive impact.
Last but not least, the six-month smoothed growth rate of the inflation-adjusted growth in M1 money supply also contributed.
Negative monthly components
The largest negative contributor was a decrease in the volume of domestic orders received in the manufacturing sector.
Additionally, there was a deceleration in the six-month smoothed growth rate in job advertisements. The interest rate spread between the 10-year government bonds and the 91-day Treasury bills also had a negative impact.
Coincident indicator
The composite coincident business cycle indicator rose by 0.3% month-on-month in January 2026. This was due to increases in the industrial production index, as well as the real value of wholesale, retail and motor trade sales.
In contrast to the strong growth in the year-on-year change in the leading indicator, the coincident indicator only rose by 0.5%. This was the first year-on-year increase since May 2025.
The leading indicator was up 6.4% year-on-year in February 2026.
Prospects
Despite the start of the Middle East war on 28 February, prospects remain good.
This is reflected in the number of airport arrivals in March, as well as the purchasing managers’ indices for March.
