Publications
Partners
The province's economic growth has not slowed as much as
that in the rest of the country and its overall index has certainly lifted
11.1% year-on-year (y/y) to 118 index points. The rise is, however, less than the 13% of the
previous two months.
In a province that relies strongly on its agricultural
sector, the sharp y/y decline of 32.2% in the agricultural index has taken its
toll (see accompanying report).
Other sectors showing warning signals include construction
(16.7% down on a year ago and 25.6% down on three months ago) and manufacturing
(0.4% weaker than three months ago).
Economists.co.za economist Mike Schüssler, the compiler of
the Free State barometer, says it's definitely not yet time to speak about a
second recession. But there is a tightness in the economy owing to inflationary
pressure, unemployment and growing poverty, among other things, in large parts
of the province.
But there are still sectors that show resilience, despite harsher economic conditions.
The transport index is 16% up on a year ago, now standing at
a high 190 index points compared, for instance, with mining’s struggling 66
points.
The province's July petrol sales rose 3.2% y/y, but
four months ago they were 9% up - an indication that this strong sector is also
beginning to lose steam.
The government is spending 22.6% more in the province than a
year ago.
But, said Schüssler, the question is whether government,
especially at a local level, still has sufficient ammunition to win the battle
against a recession.
He pointed out that various local authorities in the Free
State are struggling to meet their financial obligations.
The broad trade index, which includes wholesale and retail
trade, as well as tourism, improved 5.1% y/y.
It was boosted in particular by a 16.6% improvement in
vehicle sales. Retail sales were only 1.3% up on a year ago but wholesale sales
5.7% better. The number of passengers moving through the airport increased
10.9% y/y.
The construction sector is still under severe pressure and
contracted 16.7% compared with a year ago. Construction statistics indicate
that 25% fewer buildings were completed and sales of timber for the
construction industry were 12.2% down.
As long as the property sector is struggling, said
Schüssler, residential construction in particular will fall off, but there are
indications that banks are now relaxing their strict lending criteria somewhat
and approving more home loans than a year ago.
The financial, property and business services index is 8.9%
higher than a year ago.
The number of property transfers in the Free State is only
0.2% up on a year ago, indicating that estate agents in the province are still
experiencing difficulty. The number of home loans approved, however, rose
12.9%.
The past 18 months' growth in advertising sales continued in July, with a hefty 35.4% y/y increase.
The stress index, which measures how easy or difficult it is
to do business in the province, began to rise over the previous three months.
This is especially attributable to the Free State’s high
inflation rate of 6.3% compared with the nationwide average of 5.3%.
Schüssler said that the higher rate can be ascribed to a large part of the Free State’s population being poor and spending the lion's share of their income on food and transport. For them the inflation rate has long been sky-high.
For more business new in Afrikaans, go to Sake24.com.
For more news on the
Sake24/BoE Private Clients barometers, go to www.fin24.com/barometer.
