Last week, a stronger-than-expected U.S. employment report boosted the dollar and reinforced expectations of tighter monetary policy, while South African business confidence weakened and early third-quarter activity indicators remained mixed.
International market developments
Tensions between the U.S. and Iran remained elevated, as entrenched positions and continued military activity reduced the likelihood of a ceasefire. Markets remained focused on the risk of renewed escalation and its implications for energy supplies and regional stability. Against this backdrop, Fed Governor Waller’s more cautious remarks later in the week tempered the hawkish tone that had followed Chair Warsh’s Jackson Hole comments.
The August employment report surprised sharply to the upside, with nonfarm payrolls rising by 162 000, compared with consensus expectations of 55 000. Upward revisions added a net 55 000 jobs over the previous two months, including a revision to July’s figure from a loss of 23 000 to a gain of 21 000. Private-sector payrolls increased from 71 000 in July to 127 000 in August, while manufacturing payrolls rose by 16 000 after a gain of 14 000 in July. The unemployment rate remained unchanged at 4.1%, and labour-force participation rebounded to 61.6%, reversing months of stagnation.
Eurozone annual inflation accelerated from 2.9% in July to 3.3% in August, as energy inflation rose from 10.3% to 14.3%. By contrast, services inflation eased from 3.3% to 3.0%, while core inflation edged down from 2.5% to 2.4%. Nevertheless, with headline inflation remaining well above the ECB’s 2% target, markets fully priced in a 25-basis-point increase to 2.5% at this month’s Governing Council meeting.
Looking ahead, attention will turn to the U.S. CPI due for release on Friday.
Local market developments
South Africa’s RMB/BER Business Confidence Index slipped to 38 in the third quarter of 2026, from 39 in the second quarter, its lowest level since the third quarter of 2024. Uncertainty stemming from the Middle East conflict and weak domestic demand weighed on sentiment. Four of the five sub-indices declined, led by new-vehicle dealer confidence, which fell 11 points to 38 despite new-vehicle sales rising by 0.2% month on month and 11.4% year on year. Manufacturing confidence dropped to 27 from 31, reflecting softer exports and weak local demand, while lower capacity utilisation further highlighted spare capacity in the economy.
Looking ahead, the release of second-quarter GDP data will take centre stage on Tuesday.