Economic activity strengthens for fifth month, but risks remain - the PayInc Economic Index

The PayInc Economic Index, which tracks electronic transactions processed by PayInc, improved for the fifth consecutive month in September 2025 reflecting the resilience of the South African economy and agility of its businesses,

While several positive factors are helping to sustain demand, the low growth rate indicates the economy is operating mostly in survival mode.

“The PayInc Economic Index continued its upward trend since April, reaching a revised level of 102.3 in September 2025. This is 0.2% up on August’s level and 3% higher than a year ago,” said Shergeran Naidoo, the head of stakeholder engagements at PayInc.The resilience in economic activity, evident in the PayInc data, serves as a reminder of the complexity of the South African economy.

Elize Kruger, an independent economist, said, “No single factor is the primary driver of the outcome, but rather the outcome is the net effect of multiple forces with tailwinds and positive developments countering the potential negative impact of headwinds and challenges, such as the uncertain global environment."

Positive forces in the economy include low inflation, recent interest rate cuts, real increase in salaries for the second consecutive year, and lower fuel costs. These are in addition to the diversified trade composition, higher commodity prices, a stable and stronger rand exchange rate.

 “These factors, cumulatively, support base demand in the economy, despite low confidence levels, uncertainties and high cost of living challenges,” said Kruger.

With the historical positive correlation between the PayInc Economic Index and real gross domestic product (GDP) growth on a quarterly basis at 97.1%, the index signals a growth rate of around 1.1% for quarter three. But Kruger cautions that South Africa remains on the backfoot, with real GDP growth forecast at only around 1.0-1.2% for 2025.

“Given that our population increase is in excess of this growth rate, South Africans are on average becoming poorer, while such a low growth rate is unlikely to stimulate any significant job creation. This remains concerning given that one out of three willing people in South Africa are already unable to find employment,” she said.

Other timeous economic indicators confirmed the PayInc Economic Index’s movements. Naamsa revealed that the vehicle sales market maintained its robust performance in September 2025. Total vehicle sales improved by 24.3% year on yeare (y/y) in September 2025, with year-to-date sales up by 15.6% compared to a year earlier. New car sales in September grew by a notable 28.0% y/y and year-to-date were 22.1% ahead. The S&P Global South Africa Purchasing Managers’ Index – a composite gauge designed to give a single-figure snapshot of operating conditions in the private sector economy – remained in expansionary territory with an index level of 50.2 in September, marginally up from the 50.1 in August. The index signalled a mild improvement in the health of the private sector economy, marking the fifth consecutive month of recorded growth.

The number of transactions cleared through PayInc reached an all-time high of 181.1 million, surpassing the previous record of 177.8 million in August 2025, and up by 15.5% on a year ago.  Volume increases were recorded in all payment streams except Real Time Clearing. The nominal value of electronic transactions also increased to R1.378 trillion in September compared to R1.351 trillion in August 2025.

“Despite the underlying resilience evident in the economy, the narrative is one of surviving rather than thriving,” said Kruger. “With the economic growth rate still stuck at around 1%, the business environment remains challenging as seen in the number of job losses announced in recent weeks, in different sectors of the economy.  This reflects the underlying strain, especially in sectors that are directly affected by factors such as the impact of US import tariffs and could place downward pressure on economic activity in the final months of 2025.”

BUSINESS REPORT