Johannesburg - The South African economy is firmly on the road to recovery, but growth could take a breather over the next few months.
This is according to Mike Schüssler of Economists.co.za, the compiler of the Sake24 and BoE Private Clients' provincial barometers.
In April these indices, which measure the economic pulse of four provinces, again indicated the extent to which the economy had recovered from the recession.
The Gauteng barometer (+5.4% to 96.3 points) and the Eastern Cape barometer (+4.5% to 98 points) performed best in April. The recession also had the least impact on these two provinces .
The Western Cape barometer (+3.9% to 109 points) and the Free State barometer (+3.1% to 102 points) also indicated that business was doing better, although activity levels had not receded as much as in the other two provinces.
All four of the indices started at 100 points in 2000.
Schüssler said the sectors which are recovering relatively quickly are the broad trade sectors (retail, wholesale and leisure) and the broad financial, property and business services sector. The manufacturing sector is also slowly lifting its head while the construction industry, especially in Gauteng and the Western Cape, is seeing significant declines in activity.
Schüssler said Gauteng and the Eastern Cape are recovering the fastest, but it was these very provinces that were hardest hit during the recession.
It also appears that the national economy will take a breather in the second quarter, especially as a result of the Transnet strike.
World Cup cheer in pipeline
He adds that the 2010 FIFA World Cup will also have a positive impact on various industries. The information contained in the current barometers extends to April. There are therefore a couple more months in which World Cup spending will have a positive impact on the economy.
The biggest change in economic circumstances is currently taking place in the construction industry.
The provincial barometers show that April productivity levels in Gauteng ( 31.4%) and the Western Cape ( 32.5%) were dramatically below those of April last year.
In contrast, the construction sectors of the Eastern Cape (9.7%) and Free State (15.2%) improved.
Schüssler is not sure why these trends are so divergent, but they might reflect projects delayed by the recession or still being held back.
They could also indicate expenditure being finalised just ahead of the World Cup – especially in Gauteng and the Western Cape.
Schüssler singled out the financial, property and business services sector as being in an interesting recovery phase. He said this sector, after the manufacturing sector, bears the most scars from the recession, but it appears that it has reached a turning point in all of the provinces. The property sector is however still experiencing significant difficulty, preventing faster recovery.
- Sake24.com
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