How the barometer works

Johannesburg - Sake24's barometers constitute a unique series of comprehensive statistical indices that measure economic activity in the private sector in four South African provinces.

The indices don't simply measure economic growth, but rather the extent to which economic activity changes, both for the province as a whole and on individual sector level.

The sectors are agriculture, mining, manufacturing, construction, transport, commerce (retail, wholesale and the entertainment industry) and financial, property and business services.

The growth index measures the real growth in the province, and the stress index measures those elements that hamper growth. The stress index is in fact an indicator of how easy or difficult it is to do business in the province.

The main barometer index is a combination of the growth and economic stress indices. It is unique, because there are no similar indices measuring provincial economic activity.

The indices have been specially developed for each province's economy, according to statistical information available for that province.

This approach enables timely identification of economic trends on provincial level.

The Econometry Department at the University of Johannesburg has looked critically at the methodology of the barometers, and found it an innovative way of measuring what is happening in provincial economies.

The barometers provide valuable information to entrepreneurs, business owners and policymakers to enable them to make better decisions.

They are based 100% on statistical time series and therefore do not take individual, subjective opinions into account.

Each index uses more than 80 - in the case of the Eastern Cape, more than 100 - individual time series.

The information is collected from various sources, such as time series at Statistics SA, industry control bodies and individual companies.

The time series includes:

• interest rates
• property transfers
• motor vehicle sales
• the number of people arriving at international airports every month
• manufacturing figures
• electricity consumption
• civil debt cases
• retail and wholesale statistics
• cement sales
• advertising expenditure
• fuel sales
• mining production
• agricultural production
• volumes of shares traded on the JSE, credit extension to the household sector
• the value of new mortgage bonds, and
• job creation statistics.

- Fin24.com

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