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Cape Town - Gauteng’s economic activity does not augur well for South Africa's economic recovery.
In October Sake24 and BoE Private Clients' latest Gauteng barometer rose 4.1% year-on-year (y/y), but the growth index declined. This 3.1% y/y fall and 0.4% month-on-month (m/m) drop was fuelled by weaker numbers from the manufacturing and financial services sectors.
Economists.co.za economist Mike Schüssler, who compiled the barometers, said Gauteng’s figures were leading indicators of the recent recession and he found them concerning. In 2008 the Gauteng barometer had lost ground before the rest of the country did.
He did not necessarily believe that another recession lay ahead – but there was certainly a good indication that the past year's recovery had seriously tapered off.
The manufacturing sector fell back in recent months. This was particularly significant for Gauteng, where it is a large generator of jobs.
In recent months the strong rand had put manufacturers under pressure and, even though the sector appeared to be 3.6% stronger y/y, it was still far below the level it had enjoyed two years ago.
Manufacturing was not as weak as it might have been, said Schüssler. Over the past three to four months the sector had experienced a decline, but Schüssler reckoned this could be over. In November the latest purchasing managers' index (PMI) was above 50, indicating growth in the manufacturing sector. The question was how fast and sustainable the sector's recovery would be, he said.
According to Schüssler, the barometer indicated that the recovery had not been the same everywhere. The increasing role played by the authorities was levelling off and he reckoned this was good for the province. During the recession state expenditure had helped prop up Gauteng’s economy, but now it was time to turn this back, he said.
Whereas manufacturing figures were the month’s nasty shock, the construction sector produced a pleasant surprise with 11.6% growth m/m.
The commercial index had also contributed to y/y growth, with a 9.2% rise. This index was positive both m/m and on a three-month basis. The rise was largely thanks to a more than 30% increase in vehicle sales, as well as retail sales which were 4.1% up.
- 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.
