Bloemfontein – The KwaZulu-Natal economy is showing positive momentum, mainly thanks to consumer activity.
But in coming months it could begin to slow down, warns Mike Schüssler, compiler of the Sake24 and BoE Private Clients KwaZulu-Natal Barometer.
The latest barometer was 2.3% up year-on-year (y/y) – its weakest growth in more than 30 months. On a quarterly basis the barometer rose 1.6% to 115.7 index points.
One of the principal reasons for the weaker growth is the decline in government expenditure at all three levels – local, provincial and national – in the last quarter of 2011. Government expenditure comprises 14% of the provincial economy and in March was 10.3% down on a year ago.
"The fall in spending is probably partly attributable to the fiscal year ending in March and because by that time budgets are largely exhausted," saidSchüssler.
One of the strongest performers in March was the trade index, which rose 7.7% y/y and 4.4% on a quarterly basis.
It is the wholesale component of this index in particular that has performed well, climbing 11.5% y/y.
"Stress factors such as rising fuel and electricity prices could however soon cause consumers to tighten their belts," Schüssler said.
The fact that consumers are under pressure can already be seen from the negative showing by the tourism sector, with the number of passengers moving through King Shaka International Airport showing a negative number for the first time in 30 months.
The 1.4% growth in the province's transport and communications sector is also poorer than a couple of months ago. But the good news is that freight volumes handled through the province's ports - Richards Bay in particular - improved 12% y/y.
Property transfers (7.1% down y/y) had a negative showing for the first time in 22 months and the province's financial, property and business services index was 9.2% down on a year ago.
This is the fifth successive month that this index has fallen.
The number of new home loans granted rose 1.6% y/y.
Schüssler points out that consumers are still reluctant to incur major debt.
Advertising sales in the province were 13.3% down, partly owing to the high base created a year ago by advertisements placed before the municipal elections.
The province's manufacturing index (7.7% up on a year ago) has been rising uninterruptedly for six months.
Particularly strong growth was seen in the food manufacturing sub-sector while manufacturing of electrical machinery and cars retreated in March, mainly as a consequence of the sector's exposure to the struggling European economy.
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