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Bloemfontein – It has been a year of slow, arduous economic growth – worldwide, countrywide and also in the Free State.
The Sake24 Free State barometer, which measures change in economic activity, once again declined in August and it is only 0.2% higher than a year ago.
This represents the smallest increase of all six provinces covered in the survey.
Over the past three months there have been other larger provinces that performed worse than the Free State.
“The bigger provinces have greater exposure to problems in the international economy and are hit harder by issues such as a decline in the demand for commodities,” said Mike Schüssler of economists.co.za, compiler of the Sake24 provincial barometers.
The slowdown in economic activity is not uniform across all sectors. There are indices that show surprising buoyancy. The manufacturing industry in the Free State (5% higher than the year before) performed better than its peers in other provinces, for example.
This is mainly due to the production of petroleum, chemical, plastic and rubber products by Sasol, which is responsible for 57% of this sector’s weighting. It improved by 6.9% compared to the previous year.
“Bear in mind that there were a number of strikes in the manufacturing industry this time last year, so that the increase is from a low base,” said Schüssler.
The financial, property and business index (2.2% higher year-on-year) is continuing its slow recovery after the recession.
The number of home mortgages approved increased by 7.1% in August, while property transfers for the same period rose by 8.5%.
Consumers’ debt appetite is still decreasing and in August the number of civil debt cases dropped by 55% compared to the corresponding month last year.
The fact that advertising sales (3.1% lower) declined for the fifth consecutive month provides an indication of the current sluggish economic growth as well as the tough trade conditions this creates, said Schüssler.
The Free State trade index (4% higher than a year ago) is currently more subdued than in the first half of the year and is mainly driven by good vehicle sales (6.3% higher than last year).
The effect of higher fuel prices is now being felt in the Free State transport sector. This index rose by only 5.7% in August, this is the lowest increase in 18 months. On a quarterly basis the index declined 6.1%.
“The high fuel price has had the effect that some goods that were transported by road in recent years have been returned to rail.
"It has become very expensive to transport resources like maize or minerals by road, and this decrease in road transport also has an impact on the Free State transport sector,” said Schüssler.
Land transport in the province is only 1% up on a year ago, and petrol sales dropped 4.4% in the same period.
Two sectors present highlights: agriculture (10,5% higher than last year) and construction (13.5% higher). Current high grain prices are having a positive effect on the Free State agricultural index.
The volatile construction index has declined over the past three months and Schüssler cautions that the sector has not gained enough traction to achieve sustainable growth.
Regarding general prospects for the Free State economy, he is not too pessimistic.
“The economy is treading water, but by the middle of next year things may start looking up.”
- Sake24
For business news in Afrikaans, go to Sake24.com.
The Sake24 Free State barometer, which measures change in economic activity, once again declined in August and it is only 0.2% higher than a year ago.
This represents the smallest increase of all six provinces covered in the survey.
Over the past three months there have been other larger provinces that performed worse than the Free State.
“The bigger provinces have greater exposure to problems in the international economy and are hit harder by issues such as a decline in the demand for commodities,” said Mike Schüssler of economists.co.za, compiler of the Sake24 provincial barometers.
The slowdown in economic activity is not uniform across all sectors. There are indices that show surprising buoyancy. The manufacturing industry in the Free State (5% higher than the year before) performed better than its peers in other provinces, for example.
This is mainly due to the production of petroleum, chemical, plastic and rubber products by Sasol, which is responsible for 57% of this sector’s weighting. It improved by 6.9% compared to the previous year.
“Bear in mind that there were a number of strikes in the manufacturing industry this time last year, so that the increase is from a low base,” said Schüssler.
The financial, property and business index (2.2% higher year-on-year) is continuing its slow recovery after the recession.
The number of home mortgages approved increased by 7.1% in August, while property transfers for the same period rose by 8.5%.
Consumers’ debt appetite is still decreasing and in August the number of civil debt cases dropped by 55% compared to the corresponding month last year.
The fact that advertising sales (3.1% lower) declined for the fifth consecutive month provides an indication of the current sluggish economic growth as well as the tough trade conditions this creates, said Schüssler.
The Free State trade index (4% higher than a year ago) is currently more subdued than in the first half of the year and is mainly driven by good vehicle sales (6.3% higher than last year).
The effect of higher fuel prices is now being felt in the Free State transport sector. This index rose by only 5.7% in August, this is the lowest increase in 18 months. On a quarterly basis the index declined 6.1%.
“The high fuel price has had the effect that some goods that were transported by road in recent years have been returned to rail.
"It has become very expensive to transport resources like maize or minerals by road, and this decrease in road transport also has an impact on the Free State transport sector,” said Schüssler.
Land transport in the province is only 1% up on a year ago, and petrol sales dropped 4.4% in the same period.
Two sectors present highlights: agriculture (10,5% higher than last year) and construction (13.5% higher). Current high grain prices are having a positive effect on the Free State agricultural index.
The volatile construction index has declined over the past three months and Schüssler cautions that the sector has not gained enough traction to achieve sustainable growth.
Regarding general prospects for the Free State economy, he is not too pessimistic.
“The economy is treading water, but by the middle of next year things may start looking up.”
- 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.
