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Port Elizabeth - All is well, although not marvellous in the Eastern Cape’s economy, but the important manufacturing sector has begun to send things firmly in the right direction.
Sake24 and BoE Private Clients’ Eastern Cape Barometer for April shows economic activity in the province is 4.5% up on the corresponding month last year. The growth index lifted 0.7% and the stress index is 3.6% lower than in April 2009.
The barometer generally looks much better than a couple of months ago and the private sector is definitely doing well, said Economists.co.za economist Mike Schüssler, who developed the barometer.
A large drop in state expenditure affected the barometer negatively because of government’s significant contribution to the Eastern Cape economy. The decline can be ascribed to base effects and will probably improve within the next few months, he said.
The provincial manufacturing sector, which makes up 27% of the private sector economy in the province, has to some extent compensated for lower state expenditure thanks to 10.1% growth compared with a year ago.
Vehicle manufacturing, which in turn contributes 45.8% to the total manufacturing sector in the Eastern Cape, was a big driver behind this increase as it was 25.3% up year-on-year (y/y).
Buyers go for greener cars
According to Schüssler, the entire motor industry in the Eastern Cape has had a quick turnaround. In April new motor vehicle sales were about 28% higher than in April 2009, while in other provinces where Sake24’s barometers measure economic activity they were 15% up.
He believes that throughout the country motor dealers are benefiting from consumers who have again developed an appetite for new cars, partly because of the lower interest rates, but also from purchases by car hire companies shortly before the 2010 FIFA World Cup.
What is more, it seems people want to buy new, more environmentally friendly motor cars before the September introduction of a new tax based on the vehicle’s carbon emissions.
Both the construction and transport indices (which include communication) rose compared with April 2009 levels. The 9.7% jump in construction activity surprised Schüssler, because most of the building related to World Cup soccer projects has been completed and residential construction is far from positive territory.
Construction of smaller and larger houses fell 36% and 2% respectively, while that of flats and townhouses went up 12%.
The transport index, which in April was 4.4% up y/y, was assisted by an 8.4% surge in communications activity and 5.2% more passengers arriving at Eastern Cape airports.
According to Schüssler, the index was held back by 3.5% less freight being handled at ports (although this was before the recent strike) and lower fuel sales.
The index for financial, property and business services is still struggling, and slid 8.1% y/y. The figure for three months, is however, positive at 3.7% up. Although mortgage bonds granted are still 43% down on a year ago, advertising expenditure rose 26%.
The trade index, which makes up 15% of the barometer, is also somewhat down on April 2009. Retail improved 1.4% and expenditure at hotels and restaurants surged 5.2%. But wholesale fell 9%.
- Sake24.com
For business news in Afrikaans, go to www.sake24.com.
