Johannesburg – In April Gauteng's economy reflected the sharpest downturn since the 2009 recession.
During the month the Sake24 and BoE Private Clients Gauteng Barometer slipped 3.1% compared with March, and 4.7% compared with three months before. But it was 3.8% up on the previous year.
Mike Schüssler of Economists.co.za, who compiles the barometer, said economic growth in Gauteng is under great pressure. "We must realise that we have a volatile economy which is not growing as it should."
Schüssler said it is a cause for concern that mining is still the biggest restraint on Gauteng's growth.
In April the barometer's mining index, which is compiled from gold mining production volumes, was 12.4% down on the previous year.
"Mining's poor performance spills over into other sectors, such as manufacturing and transport," said Schüssler.
In April the manufacturing index was 2.6% up on the previous year, and the index for transport, storage and communications was 9.7% up. The latter however had fallen 5.4% in the past three months.
Schüssler said the decline in exports as a result of weaker demand from the rest of the world is now hurting the transport industry. "There may be companies now only transporting goods from the coast, and no longer to the coast."
Schüssler said the transport industry is under such pressure that some smaller transport companies can no longer keep their heads above water.
Lower state expenditure levels also contributed to April's weaker performance, but Schüssler said this is no cause for concern.
"The provincial government spent more at the beginning of its financial year, but I expect that expenditure will increase again over the next couple of months."
Over the three months the barometer's government expenditure index fell 10.7% and in April it was 1.8% down on the previous year.
But, said Schüssler, there are some bright spots in Gauteng.
The barometer’s construction index was 15% up year-on-year (y/y) and the trade index 7% up.
The trade index is compiled from the latest available figures for vehicle, petrol, retail and wholesale sales and Schüssler said it is this consumer spending that keeps Gauteng going.
But he warns that consumers will probably not be able to continue spending at the current tempo.
"The lower petrol price will offer a little relief, but growth in consumer spending will begin to slow down."
He does not expect consumer spending to start falling off.
Unemployment is putting further pressure on Gauteng consumers. The unemployment rate in the province climbed to 26% in March and Schüssler estimates it rose to 26.3% in April.
Inflation in the province is now running at 6.1% and is no longer lower than the general consumer price index for the entire country.Property sales still rising
Gauteng's construction sector appears to be lifting its head.
The barometer's construction index showed a 2.5% improvement in April.
The index is also 10.7% up on three months before and 15% y/y.
The barometer's construction index is compiled from cement and timber sales data, as well as the number of new building plans approved in Gauteng.
Schüssler said he is still unsure whether the construction index will be able to maintain its strong performance.
But it is also a good sign that Gauteng property sales are still climbing steadily. In April they were 7.2% up y/y.
The number of new mortgage loans approved by banks rose by 5.9%.
Schüssler said the Gauteng economy is showing erratic growth. Some sectors, such as mining, are clearly in recession, while others, like construction, are doing considerably better.
He said South Africa will probably record economic growth closer to 2% than the 2.7% forecast in 2012.
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