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Gauteng economy patchy

Johannesburg – Gauteng consumers are still buying cars, but the province’s economy is losing vigour.

The Sake24 Gauteng Barometer was 7.7% up year-on-year (y/y) in July, but in the previous three months had risen a mere 0.2%.

Mike Schüssler of Economists.co.za, who compiles the barometer, said it's clear that Gauteng’s economy is stagnating, but subsectors are still doing well in patches.

The construction sector is one of these and Schüssler said the construction index recorded an astounding improvement. The index slid 4.2% in July, but was still 4.1% up on a year ago.

July vehicle sales in Gauteng were 27.1% better than a year ago and reflected the strongest growth since February 2011.

“There seem to be consumers in Gauteng who are less concerned about their circumstances, responding to new vehicles on offer,” said Schüssler.

First National Bank economist Cees Bruggemans said sales of semi-durable goods and cars are the exception in an otherwise seemingly listless economy.

Bruggemans said global bank regulations in the wake of the financial crisis have made it more difficult to get a home loan, although more expensive short-term loans are still readily available. July property transfers were 7.7% down y/y.

Home loans also contracted for the first time since October 2010 and were 0.2% down on a year ago.

These declines depressed the barometer’s July financial index to 0.9% below that of a year before.

Bruggemans said the motor trade is benefiting from the lowest interest rates in 40 years, as well as sufficient credit making it possible to purchase a car.

“Motor vehicle inflation has so far been incredibly low and a flood of new top performers and entry-level cars are enticing consumers to improve their lifestyles while the going is still good.”

The barometer’s economic stress index crept 0.1% upward in June, but was still 2.7% lower than a year ago.

Gauteng’s unemployment rate lifted slightly from 25.4% in June to 25.6% in July.

In Gauteng the interest rate stood at 4.8% in July.

The mining index shot up 3.6% in July and was 9.5% up on three months before.

But Schüssler said it is unlikely that the revival in the mining sector will continue, with the strikes that have now spread to Gauteng’s gold mines as well.

- 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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