Johannesburg – The Sake24 Barometer for the major provinces in South Africa inched ahead by just 0.5% in the three months to end-August.
“I think we are crawling rather than striding ahead, but at least we are not going backwards,” said Mike Schüssler of Economists.co.za, compiler of the barometer.
The overall barometer is compiled from the major provincial barometers which measure economic activity in the six largest provinces in the country in terms of gross domestic product.
Schüssler noted that the mining indices do not yet reflect the effect of the latest strikes on the industry. The mining indices for Gauteng, Free State and Limpopo improved by 8% to 9.7% in the three months to August.
Limpopo and the Eastern Cape outperformed the other provinces in August, while Gauteng and the Western Cape fared the worst.
The Limpopo economy improved, thanks to activity in mining and agriculture. Manufacturing and government spending gave the Eastern Cape a boost.
The indices for transport, logistics and communication in all six provinces decreased considerably, while the construction sector also performed worse in all provinces in the three months to August except for Limpopo.
All five provincial trade indices shrank by some 2% in the three months to August. These declines reflect lower retail, wholesale and petrol sales.
“Consumers are realising things look bad overseas and that they have to start cutting back on expenditure,” said Schüssler.
Vehicle sales remain an exception to the rule, however, with higher year-on-year sales in all provinces.
Schüssler does not expect lower interest rates to encourage consumers to spend more, although it may help prolong current spending trends.
More government spending is needed, even if it means that the government must take on more debt despite its reduced credit rating, he said.
“Government has to increase its expenditure in order to keep the economy going, since consumers will not be able to do it on their own.”
The index for government spending in the Eastern Cape rose by 4% in the three months to August, and by 1% in Limpopo. Government spending was 2% higher in the Free State.
However, in Gauteng government spending rose by only 0.7% in this period, while the figure for the Western Cape was 0.1%.
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