SA's economic engine still roaring

Johannesburg – Gauteng’s economy looks better than it did a year ago and consumers are also in a happier position.

The Sake24 and BoE Private Clients Gauteng Barometer rose 0.2% in December and was 8% up on the year before.

The index that measures economic stress came down 0.2% in December, but was 0.9% up year on year owing to, inter alia, a rise in Gauteng’s inflation rate to 5.8%. The Gauteng economy was 1.4% up in the past quarter.

Mike Schüssler of Economists.co.za, the compiler of the barometer, says the growth rate is still not strong, but at the same time economic stress is not a problem in the province.

Gauteng’s transport, storage and communications index continues to perform well and in December was 21.6% higher than the year before. The manufacturing index rose 4.7%.

The Gauteng trade index fell by 1% in December, but was 3.1% up on the previous year. This index comprises retail, wholesale, petrol and vehicle sales.

In December vehicle sales were 17% higher than the previous year and retail sales improved by 5.5%.

Schüssler says consumers spent well in December, but also incurred a little more debt. “Gauteng is the richest province and people here like to flaunt their status.”

Schüssler says petrol price increases hampered sales, which were a mere 0.5% up on the year before.

He says consumers inclination to spend was also boosted by a 32% increase in advertising in Gauteng newspapers and on radio stations compared with the previous year.

“Advertising sales in the foregoing three months were 30% up year on year. This came off a low base, but the index is almost back where it was before the recession.”

The increase in advertising also helped to push the barometer’s financial services index 9.2% up on the previous year. But in December it lost 0.3%.

The financial services index also reflected a 16.6% increase in property transfers compared with the year before’s 5.8% rise in the value of new home mortgages.

“Houses are selling, but people are now buying smaller homes. They are trying to scale down because of higher municipal rates and more expensive electricity for bigger houses,” says Schüssler.

But he says that house sales will have to improve before Gauteng's construction sector sees a revival.

Schüssler reckons that although the barometer’s December construction index lifted 3.5%, the sector is still struggling to recover. “It's a pity, because the construction sector is still one that creates jobs and can absorb unskilled workers.”

 - Sake24

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For more news on the Sake24/BoE Private Clients barometers, go to www.fin24.com/barometer.