South Africa’s economy slowed in September 2026, but the third quarter as a whole looked stronger, according to the latest PayInc Economic Index.
The index fell by 0.4% month on month in September. This came after growth in August was revised up to 1.2%, said Shergeran Naidoo, head of stakeholder engagement at PayInc.
“Despite the dip in September, the stronger economic activity over the quarter suggests South Africa could return to positive GDP growth in Q3,” independent economist Elize Kruger said.
The economy shrank by 0.2% in the second quarter. Kruger said the better third quarter showed it could move back into growth.
The PayInc index tracks electronic payments and wholesale cash demand at inflation-adjusted prices. It stood at 103.8 in September, which is 1.8% higher than a year earlier.
A total of 197.3 million electronic transactions were cleared during September. That was 9% more than a year before and slightly up from 196.3 million in August.
The value of these payments rose to R1.447 trillion, up from R1.426 trillion in August. The number of transactions was still below the record of 201.5 million set in July.
Naidoo said transaction volumes kept growing even though the economy was under strain.
However, more payments do not always mean households are spending more in real terms. They also do not show that people have more money left over each month.
Other numbers point to a patchy recovery. The S&P Global South Africa Purchasing Managers’ Index fell to 49.0 in September from 50.5 in August. A reading below 50 shows business conditions in the private sector got worse.
Factories did better. The Absa Purchasing Managers’ Index for manufacturing rose to 50.7.
New vehicle sales also grew. They rose by 12.7% compared with a year earlier, reaching 57,761 units.
Rising fuel prices are a threat to further growth. Fuel costs have climbed as tensions in the Middle East flared up again.
Kruger warned that higher fuel prices, uncertainty and weaker business confidence were still holding back the economy. She said more pressure on household budgets could put the recovery at risk.
“So far, 2026 has proven to be a challenging year, testing the resilience of South Africa’s economy and emerging markets more broadly,” Kruger said.
The PayInc figures follow an update from grocery retailer Boxer. It said shoppers bought more as grocery prices came down.
Boxer said its selling prices fell by 2.4% during its half-year period while sales volumes went up. Its grocery sales figures cannot be directly compared with PayInc’s payment data for the whole economy.
The findings also came with a warning that food inflation could return. That could undo some of the relief shoppers have felt at the till.
Source: this article is based on reporting by IOL. Image: IOL. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.