Port Elizabeth – The Eastern Cape economy has certainly not yet overcome its worst difficulties but it is starting to look better and although the Sake24 and BoE Private Clients Eastern Cape Barometer for September indicates that the economy is still suffering, there is hope.
This is according to Economists.co.za economist Mike Schüssler, the compiler of the five provincial barometers. Month-on-month the barometer slipped only 1.4%, compared with the August figure which was 2.1% down on July. The barometer is 2.8% down year-on-year (y/y).
“There is a definite slowdown in the economy of the Eastern Cape,” Schüssler said.
An improvement can be seen in the manufacturing sector which is 5.3% up y/y, mainly thanks to vehicle manufacturing which rose 39.7%. “These improved figures can be ascribed to the ending of the strikes the industry experienced between July and August.”
Schüssler said the improvement was also supported by a jump in vehicle purchases in the province, which went up by an astonishing 23.8% compared with last year's figures.
Les Holbrook, managing director of the Border Kei Chamber of Business, agreed with Schüssler. “There's a definite improvement in the vehicle manufacturing sector. If one looks at vehicle purchases, there's no doubt that things are currently doing better in this industry.”
Holbrook said Mercedes Benz has introduced additional shifts so that it can manufacture 20 more vehicles per ordinary shift. “Mercedes usually manufactures about 210 vehicles a day, and an additional 20 therefore represents an improvement of almost 10%.”
According to Holbrook, most of the other vehicle manufacturers in the province - including General Motors and Volkswagen - are also doing well.
He said further that the retail industry is seeing revival. This is reflected by the barometer’s figures.
On the negative level, says Schüssler, the construction industry is still hardest hit, with a huge 33.1% decline y/y.
The agricultural sector also continues in the red (12.8% down on the corresponding period last year).
“The Eastern Cape continues with the country's highest inflation, currently at 6.4% compared with 6.1% last month.” The unemployment index has, however, shown a slight decline.
Schüssler said the decrease in government expenditure in the province (1.6% down y/y) is good, because this is more in keeping with the general slowdown. But it would have been better had it spent less at the beginning of the year and more now.
- Sake24
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