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13 August 2026 – South Africa’s economic activity picked up in July after two consecutive months of decline, offering a small but welcome sign of resilience in an economy that has struggled to build sustained momentum.
The PayInc Economic Index increased in July, albeit by a marginal 0.3%, following declines of 2% in May and 0.9% in June and is now almost a full percentage point higher than a year ago.
The improvement coincided with the first notable decline in petrol and diesel prices in several months, after substantial increases earlier in the year.
“Fuel prices have emerged as an important driver of economic activity in recent months, given their direct impact on household budgets and business operating costs,” says Elize Kruger, an independent economist.
“July’s lower fuel prices provided some welcome relief and coincided with an improvement in economic activity. However, continued volatility in international oil markets means that the outlook remains uncertain,” Kruger added.
Temporary
The relief may prove temporary. The international oil price was around $89 (R1, 440) a barrel when the index was compiled, with the report warning that another round of domestic fuel price increases could be on the horizon for September.
Brent Crude was trading at $84 this morning, having shot past $120 during the Iran-US war when it seemed that the first peace truce would collapse.
Kruger said continued geopolitical uncertainty and volatility could affect household and business confidence, including spending, investment and hiring decisions.
There were, however, several other signs of resilience in July.
The S&P Global South Africa Purchasing Managers’ Index edged down to 50.3 from 50.5 in June. While marginal, a reading above 50 indicates an improvement in private-sector business conditions. Business activity increased for the first time in three months, while lower fuel prices helped ease cost pressures.
Vehicle sales were also strong. Naamsa reported total sales of 57,708 vehicles in July, up from 54,410 in June and 11.9% higher than a year earlier. July marked the 22nd consecutive month of year-on-year growth.
People spending
Payment activity provided perhaps the clearest sign of resilience.
The number of transactions cleared through PayInc reached an all-time high of 201.5 million in July, up from 186.8 million in June and 13.5% higher than a year earlier. The nominal value of electronic transactions rose to R1.521 trillion from R1.427 trillion in June.
But the July improvement needs to be seen against what came before it.
The PayInc index fell by 2% in May and another 0.9% in June. It had reached 105.5 in April before falling to 103.3 in May and 102.4 in June, making July’s 102.7 reading a partial recovery rather than a return to the levels seen earlier in the year.
The relationship with fuel prices was particularly pronounced. PayInc found a strong inverse relationship between fuel-price movements and economic activity from March onwards, with higher fuel prices coinciding with weaker activity and July’s lower prices coinciding with the recovery.
Economic drag
The labour market also remains a significant drag.
South Africa’s official unemployment rate rose to a four-year high of 33.6% in the second quarter, from 32.7% in the first. The number of unemployed people increased by 345,000 to 8.5 million, while the number of employed people fell by 16,000 to 16.7 million.
Kruger said the labour market remained a clear indication of the broader pressure on the economy.
“The labour market remains one of the clearest indicators of the pressure facing the economy,” says Kruger. “Meaningful job creation requires stronger economic growth and a business environment that gives companies the confidence to invest, expand and hire. Higher input costs, elevated interest rates and persistent uncertainty continue to make those decisions difficult.”
So while July brought some welcome news, the recovery remains fragile.
“July offered a welcome improvement, but one month does not yet signal a sustained turnaround,” says Kruger. “A more meaningful recovery will depend on greater stability, easing cost pressures and an improvement in confidence that encourages households to spend and businesses to invest and create jobs.” Source: Business Report (IoL)