The Reserve Bank’s leading business cycle indicator fell 1.4% in June, its third consecutive monthly retreat, primarily reflecting a decrease in South Africa’s US-dollar-denominated export commodity price index and a deceleration in the six-month smoothed growth rate in money supply. Overall, five of the seven available component time series decreased, the others being the interest rate spread between 10-year government bonds and 91-day Treasury bills, the number of new passenger vehicles sold and the composite leading business cycle indicator for South Africa’s major trading-partner countries.These outweighed the increase in the number of residential building plans approved and the acceleration in the six-month smoothed growth rate in job advertisements. The South African Reserve Bank analyses the leading indicator and two other indices to determine whether there has been a turning point in the business cycle. The leading indicator forecasts economic activity several months ahead, while the coincident indicator reflects present activity and the lagging indicator confirms past changes.The components sampled include export commodities, business confidence, the average number of hours worked per factory worker in manufacturing, building plans approved, new passenger vehicle sales, manufacturing sector domestic orders, interest rates, government bonds, treasury bills, money supply and job advertisements.Read: Reserve Bank’s index that predicts the economy slips on oil-fuelled anxietyTuesday’s report shows that the coincident business cycle indicator decreased by 0.2% in May due to declines in the real value of wholesale, retail and motor trade sales and the industrial production index. The lagging business cycle indicator was, however, up 0.9% in the same month.Over the last three prints, the leading indicator has reflected a constrained business environment due to the war in the Middle East, which has disrupted oil supply and driven prices higher, translating into a sharp increase in the cost of fuel in South Africa.The BER/RMB business confidence index, one of the components sampled in the composite business cycle indicators, fell eight points to 39 in the second quarter of 2026, reflecting the deterioration in the operating environment due to the war.Business Day