Bloemfontein - After the December holidays Free State
consumers started to tighten their belts, but internet and cellphone use
continued to rise.
These are some of the findings of the Sake24 and BoE Private
Clients Free State Barometer for February.
Every month the Free State barometer measures the province's
economic activity across a broad front and then compiles an index that shows
which sectors of the economy are growing or lagging.
In February the overall index rose 3.7% compared with the
year before. This is the smallest rise since October 2011, when the provincial
barometer was still rising 13.1% year-on-year (y/y).
"It's certainly noticeable that the provincial economy
is now growing more slowly and that economic stress is on the increase, but we
are still in positive territory," said Economists.co.za director Mike
Schüssler, the compiler of the Free State barometer.
More talk, travel
In February the transport and communications index performed
the best (16.7% up on the previous year). The good rise can be partly
attributed to overland transport, which rose 12.7%, but also to the greater use
of communication devices like the internet and cellphones.
The communications portion of the index rose 22% compared
with the previous year.
Other Free State indices that rose were those for government
(9.5% up), financial, property and business services (6.6%), trade (5.6%) and
manufacturing (3.5%).
Schüssler warned that consumers will have less disposable
income this year and will not be able to continue stimulating the economy as
they did last year.
"Consumers are becoming more careful and higher prices
for everything – from fuel and toll roads to water and electricity – mean that
they'll have still less money in their pockets."
February retail sales were 4% up on the previous year.
Vehicle sales rose only 5% over the period. Although still positive, this is
the weakest growth in 25 months.
One good sign is that the Free State index for financial,
property and business services has continued to rise since November.
A total of 8.7% more home loans were approved than in the
previous year and property transfers were 15.9% up. "This market is still
recovering and is still far from its highs of four years ago," said
Schüssler.
Asset management improved 2.9% over the year before, the
number of hire purchase agreements rose 3.5% and advertising sales were 24.5%
up.
The Free State barometer indicates that the local
construction industry (32.1% down y/y) is still under pressure. Schüssler
warned it is difficult at this stage to say whether the 7.2% rise over the past
three months is merely a temporary flutter or the start of a recovery phase.
The agricultural index (10.2% down y/y) also began to
improve in the past three months. Vegetable production recovered considerably
but producer prices, especially beef, declined.
Consumers unfortunately are still seeing little proof of
lower meat prices. According to Schüssler, there is still a considerable amount
of meat in cold storage rooms being sold at high prices before the lower prices
work their way through to consumers.
The February mining index was 6.9% down on a year ago.
Because the Free State economy largely depends on its goldfields, this region
is actually worse off than the rest of the province, said Schüssler.
"A Payprop survey found that goldfields rental property
proceeds are the lowest in the country. This gives us an indication of how weak
demand has become owing to the poor domestic economy," he said.
Weaker mining production also leads to a smaller demand for
electricity, and the province's electricity index fell 4.7%.
The stress index was 1.8% up, mainly owing to inflationary
pressures.
"No red lights are flashing for the Free State economy,
but the barometer shows that growth is slow and that sectors under the cosh
have not reached the point of recovery."
- Sake24
For business news in Afrikaans, go to Sake24.com.
For more news on the Sake24/BoE Private Clients barometers,
go to www.fin24.com/barometer.