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Johannesburg – The Gauteng economy seems to have gone into
hibernation from May.
In the three months to end-May the BoE Private Clients and Sake24 Gauteng Barometer dipped 2.7%. But it was 4.6% up on the year before.
Mike Schüssler from Economists.co.za, who compiles the barometer, said he now has no doubt that the Gauteng economy is stagnating.
"There will be growth, but it will be only sufficient to keep pace with the population increase. No one will become richer or poorer."
Schüssler said the mining industry is a particular millstone around Gauteng's neck.
"Most mines in Gauteng are gold mines and the industry has been struggling for a long time. This will have a negative impact on the province's economy for a long time."
In May the barometer's mining index was 12.1% down year-on-year (y/y) and 20.6% down on three years before.
Schüssler said pressure on the mining sector because of lower commodity prices is also hurting many Gauteng factories.
The May barometer's manufacturing index was only 0.5% up on the previous year, pulled down by steel manufacturing in particular.
"Gauteng's factories are feeling the cold winds blowing in from the European economy," said Schüssler.
Automobile manufacturers are however doing better because Gauteng's motor sales remain strong.
In May, vehicle sales in this province were 8.3% firmer than the year before, despite consumers spending less on durable goods.
But people in Gauteng spent much more in pharmacies and hardware stores. The latest available figures for April show pharmacy sales were 7% up y/y, with those of hardware rising 15%.
The barometer's May trade index fell 0.5% on a monthly basis, but was 6.4% up y/y.
This index is compiled from the latest available figures for vehicle, petrol, retail and wholesale sales.
Consumers helped the Gauteng construction industry lift its head.
Schüssler said that in May construction showed a strong revival and the barometer's construction index rose 10.8%. It was 17.7% up y/y.
This improvement is largely attributable to a 57% increase in the three-month moving average of the square meterage of non-residential buildings completed.
Schüssler said this figure reflects an increase in retail space in particular.
He said non-residential construction figures are often volatile because large buildings are included in the figures only once they are fully completed.
The barometer’s index for transport, storage and communications was 11.9% up y/y.
This index is compiled from data on air and overland transport in Gauteng, as well as the number of cellphone and landline telephone calls made across the entire country.
Communications still made a positive contribution to the index, but the number of passengers moving through the OR Tambo airport in May declined for the first time in eight months.
Schüssler says this decline reflects higher petrol prices, but also the fact that Europeans now have less money to spend on holidays.
The barometer’s index measuring economic stress in the Gauteng economy rose 0.4% in May, but it was 2.2% down on the year before.
Economic pressure is calculated based on unemployment and inflation.
The May Gauteng unemployment rate slipped to 26.6% and inflation was 5.5% lower than South Africa’s general inflation rate.
- Sake24
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