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Johannesburg - Economic growth in Gauteng is rapidly slowing
down and the province appears to be entering a downturn.
The Sake24 and BoE Private Clients Gauteng Barometer fell
1.6% in July and is currently only 6.7% up on a year ago. It is also 2.5% down
on three months ago. This is the barometer's biggest decline over a three-month
period since April 2010.
The barometer's compiler, Mike Schüssler of
Economists.co.za, says the Gauteng economy reached a turning point during
this quarter.
"We have been discussing it for some time, but for the past
month or two the slowdown in growth has worsened. There is now an increased
chance of a recession."
The barometer’s manufacturing index, in particular, lost
ground. In July it fell back 1.3% and has shown the weakest y/y growth since
March 2010.
State expenditure also declined 3.2%, but it is still 3.5%
up on a quarterly basis.
July vehicle sales in Gauteng were only 1.4% up year-on-year (y/y), in contrast with the 24% improvement in April.
"Vehicle sales, like
sales of all other durable goods, are suddenly showing a sharp decline. There
is also a rapid slowdown in petrol sales," said Schüssler.
Vehicle sales, together with retail and wholesale sales, form part of the barometer’s trade index, which showed no change in July and was 4.8% less than three months ago.
Even the index for transport, storage and communication - previously one of the province's major growth drivers -
dropped 1.2% in July. But it had improved 0.8% in June and is still 17.4% up on
a year ago.
The number of passengers disembarking from aircraft at OR
Tambo airport rose 0.4%, but Schüssler said the previous two months had been the
quietest since February 2009.
Gauteng’s July stress index halted its decline and rose
0.5%. Although interest rates are still low, economic pressure in Gauteng is
still building up as a result of rising unemployment and inflation. The
unemployment rate is currently 28.6%.
As to Gauteng's growth slowdown, Schüssler said that Gauteng
is the first to be affected by global conditions, but we can't just blame the
rest of the world. Local factors are also involved.
He believed that the weaker gross domestic product growt
for the second quarter will probably persist in the third quarter.
Stanlib economist Kevin Lings said recent economic data
indicate that the South African economy has begun to lose momentum, and this is
reflected by weaker retail and vehicle sales.
The recent broad global slackening of economic activity will increasingly impact South Africa's growth momentum in coming months, he said.
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.
