Western Cape growth cools

Cape Town - The Western Cape's economy is growing, but the process of recovery following last year's recession is not as vigorous as before, as shown by the latest Western Cape Sake24 and BoE Private Clients' barometer.

In April the Western Cape barometer rose 3.9% to 110.2 index points compared with a year ago, but it was 1.9% down on March. In the three months to the end of April the index was 0.4% lower compared with the three months to the end of January.

Economists.co.za economist Mike Schüssler said government expenditure, which represents 10.8% of the overall barometer index, rose sharply in the fourth quarter of 2009, helping to counter the recession. But growth has since slowed down.

In April government expenditure was 8.3% higher year-on-year (y/y), but in the three months to April 7.1% it was down on the previous three months.

The trade index reflects a turning point. It contracted 1.2% compared with a year ago, but compared with March rose 0.3% and in the three months to the end of April 1.4% compared with the previous three months.

The agricultural sector is still struggling. Fruit production was 4.2% down in April, wine production 12% up and meat production 2.7% better, but grain production 20.3% down and fisheries lost 0.9%.

Overall, the agricultural index was 2.5% down.

Strong mining sector growth

In the Western Cape in April mining, which makes up only 0.2% of the province's economy, grew strongly off last year's low base. The province’s mining index is dominated by chrome production, which comprises 56% of the mining index, and chrome production rose 16.4% in April compared with the year before. The mining index grew 28.1%.

Recovery in the manufacturing sector is still one of the drivers behind the economic improvement. But in April the index climbed only 2.1% compared with a year ago. The production of petroleum products was 7.6% up,and food and liquor output 7% higher.

Textile activities, which represent 5% of the manufacturing index, fell 4.6% and timber production 2%. Metal production jumped 9.6% and manufacturing in the motor spares industry 25.3%.

Construction is still struggling and the index has slipped 32.5%. Although building material sales have grown by 20.8%, there has been a 47.9% drop in the square footage of completed buildings approved by municipalities.

While the category for extensions, modifications and other buildings grew 34%, the number of square metres of completed homes smaller than 80m² fell 52%, flats and townhouses 48%, office buildings 98%, industrial buildings 45% and retail space 47%.

- Sake24.com

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