Cape Town – In the
quarter to end-December the Western Cape economy did not do as badly as in the
previous two quarters, but at this stage there are still no fireworks, says
Economists.co.za economist Mike Schüssler, the compiler of the Sake24 and BoE
Private Clients’ monthly Western Cape Barometer.
Although the barometer’s growth index is a healthy 8.8% up
year on year (y/y), the December stress index worsened as a result of rising
inflation and the fact that people are still struggling to find work.
Inflation in the Western Cape recorded 5.9% in December, but
interest rates were unchanged and summonses for debt 15% down on the year
before, which means that fewer people were in trouble owing to indebtedness.
The stress index stood at 4.8% compared with November’s
3.1%.
“The Western Cape economy is on the move, but not
sprinting,” is how Schüssler describes the province’s financial affairs.
Sectors that did well in December, compared with the
previous year, included manufacturing (3.5% up), transport (18%), commerce
(8.7%), the financial, property and business services index (11.7%) and
government expenditure (3.8%).
The construction sector is still in difficulty and Schüssler
does not expect it to improve soon. The barometer’s construction index is 2.9%
down on the previous year and almost 40% down on three years before.
Schüssler says he understands some architects are working
only three to four days a week, and this also applies to conveyancing attorneys
– a reflection of the slump in the industry.
Retail as a subdivision of the trade index grew 5.4% in
December. Vehicle sales in the Western Cape were 26% up on the year before and
wholesalers 11.5% better.
The agricultural sector, which was 5.1% off, was hit by a
10% decline in meat production, a 9.7% drop in wine production, and food
production being 5.1% down. But wheat production was 8.9% up.
The financial, property and business services index was
driven largely by a 28% rise in advertising spend, which has been positive for
11 successive months and has shown double-digit growth for 10 months.
The flow of money to asset managers and the insurance
industry, which plays a major role in the Western economy, climbed 11.3%.
In December the government expenditure was 2.3% down on
November and in the three months to end-December 7.5% less than in the previous
three months.
Schüssler reckons it may not be a bad thing that government
expenditure in the fourth quarter of last year began to hold back, because with
the European financial crisis it would be to government's advantage to hold on
to the capital for future contingencies.
- Sake24
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