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Johannesburg - The transport industry and government have kept the Gauteng economy in the fast lane for the past year, but it seems that the financial services sector may have taken a wrong turning.
The Sake24 and BoE Private Clients Gauteng Barometer rose 8.2% in the year to end-May.
Over this period the barometer’s sub-index for transport, storage and communication was 21.3% up and the state expenditure index 12.2%. These sub-indices were the only two showing growth over the past three years.
The financial services sub-index was previously one of the drivers of growth in Gauteng, but declined 1.6% year-on-year (y/y) in May. It was pulled down by smaller trade volumes on the JSE, which was down 14% y/y in May.
Economists.co.za economist Mike Schüssler, who compiled the barometer, said the decline in JSE volumes is possibly a warning of what could happen to the Gauteng economy going forward.
Gauteng is still growing, he said, but at a slower pace. The first signs that growth is starting to slow down have started to appear.
Gerhard Lampen, the head of Sanlam iTrade, said share prices often reflect future expectations rather than the current state of the economy.
The JSE usually discounts what will happen in the economy in 12 months' time. At this point the market is not certain what profits will be a year from now.
Lampen said the fact that the South African stock market has for some time been trading in a narrow range is possibly keeping investors out of the market.
The market, he said, does not have a definite trend, making many investors impatient. If it should break through its previous high, volumes will probably pick up again.
Since Gauteng is the heart of South Africa’s financial services sector, JSE volumes carry more weight in the Gauteng barometer than in the other provincial barometers.
The financial services sub-index is also derived from credit extension statistics in the private sector. Values of instalment sales and home loans in Gauteng are still rising, and this is the only province where house sales remain positive.
Gauteng’s trade index, which is calculated from retail and wholesale sales, was 5.6% up for the past year.
But Schüssler reckons growth in Gauteng’s manufacturing industry is tapering off. The manufacturing index improved 3.9% in the past year, but lost 0.2% in May.
- 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.
The Sake24 and BoE Private Clients Gauteng Barometer rose 8.2% in the year to end-May.
Over this period the barometer’s sub-index for transport, storage and communication was 21.3% up and the state expenditure index 12.2%. These sub-indices were the only two showing growth over the past three years.
The financial services sub-index was previously one of the drivers of growth in Gauteng, but declined 1.6% year-on-year (y/y) in May. It was pulled down by smaller trade volumes on the JSE, which was down 14% y/y in May.
Economists.co.za economist Mike Schüssler, who compiled the barometer, said the decline in JSE volumes is possibly a warning of what could happen to the Gauteng economy going forward.
Gauteng is still growing, he said, but at a slower pace. The first signs that growth is starting to slow down have started to appear.
Gerhard Lampen, the head of Sanlam iTrade, said share prices often reflect future expectations rather than the current state of the economy.
The JSE usually discounts what will happen in the economy in 12 months' time. At this point the market is not certain what profits will be a year from now.
Lampen said the fact that the South African stock market has for some time been trading in a narrow range is possibly keeping investors out of the market.
The market, he said, does not have a definite trend, making many investors impatient. If it should break through its previous high, volumes will probably pick up again.
Since Gauteng is the heart of South Africa’s financial services sector, JSE volumes carry more weight in the Gauteng barometer than in the other provincial barometers.
The financial services sub-index is also derived from credit extension statistics in the private sector. Values of instalment sales and home loans in Gauteng are still rising, and this is the only province where house sales remain positive.
Gauteng’s trade index, which is calculated from retail and wholesale sales, was 5.6% up for the past year.
But Schüssler reckons growth in Gauteng’s manufacturing industry is tapering off. The manufacturing index improved 3.9% in the past year, but lost 0.2% in May.
- 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.
