In January, the SARB’s leading indicator increased by 0.9% m/m to 114.4 points, nearing its November peak of 114.7—the highest since late 2022—and signalling a potential resumption of its upward trajectory. This follows a revised 113.3 print in December. Key drivers included a surge in the six-month smoothed growth rate of new passenger vehicle sales and higher residential building plan approvals, reversing their negative impact from the prior month. However, declines in manufacturing workers’ average hours and slower job advertisement growth tempered gains. Year-on-year, the indicator rose 3.4%, sustaining a ten-month streak of annual increases. Improved business conditions, lower interest rates, muted inflation, and R40.0 billion in two-pot retirement system payouts have bolstered consumer sentiment. Yet, challenges persist, including the return of load-shedding, ongoing structural inefficiencies, and political uncertainty following a lacklustre National Treasury budget. These factors point to a cautious optimism, with sluggish growth likely to constrain sustained progress in the year ahead.

Looking internationally, data published yesterday showed US consumer sentiment declined to its lowest since early 2021, as per the Conference Board’s consumer confidence index. Despite Fed Chair Jerome Powell’s assurance of a healthy economy, uncertainty over Trump administration policies and the economic outlook weighed heavily. Notably, the future expectations subindex fell 9.6 points to 65.2—the lowest in 12 years—while present conditions dipped 3.6 points to 134.5. Income optimism plummeted, with only 16.3% expecting higher earnings (down from 18.8%). Labour market and business outlooks weakened, though current job availability improved slightly. Buying plans varied: homes and cars declined, but appliances and vacations rose. Inflation expectations climbed to 5.1%, signalling persistent concerns amid policy uncertainty. The drop in consumer sentiment bodes ill for the US economy, since consumption makes up the majority of economic activity. However, it is worth noting that a reversal of Trump’s tariff policies, should he get the concessions from other nations that he seeks, could lead to a rebound in consumer confidence.