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Construction, consumers boost Free State

Dec 09 2011 07:51
Vida Booysen

Bloemfontein - Free State consumers' appetite for shopping has been stimulated quite some time before Christmas.

This is evident from the Sake24 and BoE Private Clients Free State Barometer for October, which shows a couple of healthy rises on the commercial front.

The other good news is that the shaky construction index started to lift its head in the past month.

The Free State barometer, compiled by economist Mike Schüssler, measures the pulse of the province's economic activity in eight sectors.

The province's overall index for October was 12.9% up on a year ago and 3.1% up on three months ago. Economic stress factors fell 6.2% compared with a year ago.

"Business is looking better in sectors like agriculture, construction and trade, which experienced a small slump in the second quarter," said Schüssler.

The broad trade index, which includes entertainment and tourism, is 7.1% better off than a year ago. Retail sales strengthened 5.7% year-on-year (y/y).

According to Dirk Klopper, director of retail group Kloppers, furniture, computer equipment and television sets sold particularly well recently. "There's in fact no division that is currently performing poorly."

He said that, with the exception of Free State rural areas which are still under the cosh, most local retailers' sales are now improving.

In October vehicles sales were 30.5% up. This was the 21st successive month of double-digit rises.

The province's transport and communications index is experiencing phenomenal growth. In the year to October it was 14.5% up and 31.8% up on three years ago. This was especially driven by a 26.4% y/y rise in the communications index.

The number of passengers moving through the airport was 5.8% up on the year before, and land transport increased 6.3% in the period.

"As long as Africa's economies and demand for its resources are growing, the transport index will remain high – because goods have to be transported through the harbours to and from neighbouring countries," said Schüssler.

The construction index is still 23.8% down on last year but gained traction in the three months to October, rising 0.3%.

Schüssler believes this is the beginning of a more stable phase, but warns it can still take a while before the recovery gains strength. "We are still in a hole, but the hole is not being dug deeper."

The financial, property and business services index is 6.5% up on a year ago. The improvement in the property market is still weak and property transfers improved only 1.3% y/y.

Asset management is 8.2% stronger, and advertising sales rose a healthy 34.8% y/y.

The warning lights are however flashing for the mining sector where, over the past three years, activity has contracted 16.2% despite a high global gold price and a weakening rand which makes gold production more profitable.

There has also been a mere 0.2% y/y improvement in the manufacturing index.

"If the two sectors do not improve to the same extent as the construction and trade sector, this will continue to suppress growth in the province," said Schüssler.

 - Sake24

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For more news on the Sake24/BoE Private Clients barometers, go to

free state  |  barometers



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