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Vehicles sales boost economy

Bloemfontein – Many South Africans treated themselves to a new car in November and December, but used them for fewer trips than expected.

This is one of the trends seen in Sake24 and BoE Private Clients’ December provincial barometers. Every month this unique series of statistical indices measures economic activity in five of South Africa's biggest provinces.

“South Africans appear to prefer buying a new car than a new house,” says Economists.co.za economist Mike Schüssler, who compiles the barometers.

In all of the provinces, vehicles sales showed double-digit rises. This generally underpinned the positive performance of the broad trade indices (which include tourism and entertainment).

Gauteng (3.1% year on year) had the weakest trade increase and the Western Cape the strongest (8.7%).

Schüssler says petrol sales and tourism figures were weaker than expected in the Eastern Cape, the Free State and Gauteng.

Money was also spent on cellphones, the internet and durable goods like sound equipment.

Cellphone usage increased by 25%, while fixed-line usage declined 7%. This is attributed to growing competition among telecommunications companies offering lower rates for data and internet services. Internet usage, measured from the number of Web page impressions, rose more than 45%.

Property transfers and bond registrations improved moderately nationally, but still did not approach pre-2009 levels.

“It’s certainly clear that banks are approving more home loans these days, but we are also seeing that people are more reluctant to incur debt.”

Schüssler expressed his concern about the effects of the global economy's current slow growth.

His viewpoint is supported by the Reserve Bank, which last month lowered its outlook for South Africa's economic growth from 3.2% to 2.8%.

Primary sectors – such as agriculture, where the index for four provinces dropped an average 6.9% in December, and that of mining (3.1% down) – are being negatively affected by lower foreign demand for South Africa's resources and products.

The mining sector is being further hurt by higher electricity prices as well as agreements with unions that negotiate above-inflation wage increases.

The barometer shows that government expenditure in the five provinces began to slow down by year-end. Whereas the beginning of last year still saw double-digit increases, the average December increase, after inflation, was only 6%.

Schüssler does not necessarily believe this to be a bad sign.

“Government realises that it has to have a buffer in case a slowdown in global economic growth becomes a reality this year.”

 - 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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