Cape Town - South Africa's private sector is rapidly declining, and there is no sign that the country's foremost provinces will soon return to robust economic health.
The September Sake24 and BoE barometers for individual provinces show the enervated condition of various provinces. Gauteng in particular is already in the emergency ward.
In September the Gauteng barometer fell 16% compared to September last year - the biggest decline since the index began to measure activity levels in the province.
The Eastern Cape (-12%), Free State (-11.8%) and the Western Cape (-11.1%) also fell sharply. These are the strongest declines ever in a single month, and indicate the distress being experienced by individual provinces.
The barometers are a unique set of corresponding indices that measure activity levels in the private sector economies of individual provinces.
T-Sec chief economist Mike Schüssler, who - together with Sake24 - designed the barometers, says it is clear that the general health of the private sector economy is in serious decline.
"The economies of the US and Britain are already contracting and South Africa clearly won't escape the consequences.
"The financial services, property and business services sectors, in particular, as well as certain individual industries such as the motor industry, are already in recession. This will spill over into the broad retail and wholesale sectors, and later into manufacturing."
Schüssler adds that the bottom is not yet in sight. "We are now only in the middle of the downturn. Although it started months ago, provincial economies are rapidly contracting."
He points out that various provinces are following in Gauteng's footsteps.
Gauteng's problems in its financial services and property sector are also evident in the other provinces. In September this sector in Gauteng fell 15.7%. Significant declines also occurred in the Free State (-12.9%), Western Cape (-11.8%) and Eastern Cape (-6.6%) and businesses in this industry can justifiably be concerned.
"These declines derive mainly from a sharp weakening in the residential property sector, affecting not only financial institutions but also a wide range of related groups such as estate agents, attorneys, appraisers and businesses in the building industry," says Schüssler.
"This sector will remain under pressure for several more months and could weaken even further."
Although some industries have been less affected, the overwhelming majority of individual sectors measured by the barometers are seriously ailing. The agriculture and transport industries in the Western Cape are still doing well, while the Eastern Cape construction sector is growing rapidly.
- Sake24