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Western Cape economy on the boil

Cape Town - The Western Cape economy is on the boil again, as evidenced by the latest information from the Sake24 and BoE Private Clients' Western Cape Barometer.

According to the barometer, all indicators other than the construction sector were positive in January – year-on-year (y/y) as well as on monthly and three-monthly bases.

The barometer’s main index is 9.4% up, at 112.7 index points; the growth index is 7% up at 119.8; and the stress index, which measures stress factors and indicates positive conditions if it drops, is 2.2% down at 106.3.

Economists.co.za economist Mike Schüssler, the compiler of the barometer, said the stress index was still being depressed by lower inflation and lower interest rates, while unemployment remained worryingly high. Inflation in the Western Cape in January was running at 3.5%.

In January the agriculture index rose 6.4%, thanks to meat production which was 16.5% up and 21.8% higher wine sales. Fishery operations, which form part of the agriculture index, grew 4.4% – and fruit exports a mere 0.2%. Grain production was down by 15.1%.

The mining index, which comprises a small part of the main index in the Western Cape, shot up 26% compared with a year ago.

The manufacturing index was somewhat disappointing, rising only 0.8%. But food production climbed 7.1%, and wood manufacturing 9.7%.

Subsectors that fared poorly were petroleum and glass production, which were down by 6.3% and 4.1% respectively, as well as base metal manufacturing which dropped 3.5%.

The manufacturing of electrical machinery was 11% up, the motor industry 7.3% up and the television and radio sector 4.5% up.

Schüssler was surprised that the electricity index increased by 2.6%, despite the sharp hike in energy tariffs.

The 11.2% decline in the construction index had been expected. Schüssler said the sector would remain under pressure until the housing market got into gear again. He was not concerned because it was part of the economic cycle.

- Sake24

For business news in Afrikaans, go to Sake24.com.

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

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