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Economic activity up 11.8% in W Cape

Cape Town - The Western Cape economy is still showing strong momentum in post-recession recovery, although certain sectors have not returned to pre-recessionary levels.

The Sake24 and BoE Private Clients Western Cape Barometer for April shows activity levels in April at 112.3 index points were 11.8% higher than in April a year ago.

In 2009 the index was only 6.3% higher than in April 2008. This figure is somewhat misleading, because the contribution of government expenditure to the Western Cape in April was an enormous 48% more than three years ago.

Various private sector industries are still struggling to achieve pre-recessionary activity levels.

One of the most important sectors for the Western Cape is financial, property and business services. Activity levels in the sector in April were 13.5% down on three years ago.

The barometer’s April construction sub-index was 18.8% lower than 36 months ago, the manufacturing index 5.4% lower and the agricultural index 11.7% lower.

Although mining constitutes a small percentage of the province’s economy, the mining index was also 8.8% down on three years ago.

The province’s agricultural sector is also struggling. The agriculture index was 8.2% down year-on-year (y/y) at 96.9 index points. Compared with April 2008, the agriculture index was 11.7% off.

In the sub-divisions of the agriculture index, only fruit production reflected growth of 3.3% compared with three years ago. Wine production was 11% down, meat production 15% down, and fishing operations contracted 30%. Grain production was sharply down on three years ago at 31.5%.

The manufacturing index was 5.4% lower than 36 months ago, but 3.5% higher than last year.
Economists.co.za economist Mike Schüssler, the compiler of the barometer, pointed to the sharp decline in the construction industry following the recession, from which it has still been unable to recover. April's cement sales, for instance, were still 25% down on April three years ago.

But Schüssler reckons that although the consumer is again prepared to spend, more expensive items like property are still not on the shopping list. Although April vehicle sales in the Western Cape were 24% up y/y, that was still 20% less than in April 2008. Property transfers were 55% down on three years ago.

Schüssler therefore still expects to see many auctions in the Western Cape, although he acknowledges that pressure on the consumer is considerably less than it was three years ago.

The prime lending rate is, for instance, 40% less than it was in April 2008.

- 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.
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