Western Cape economy cools down

Jul 12 2012 12:01
Francois Williams
Cape Town – Together with the chilly Cape weather the Western Cape economy is also cooling down, as is evident from the May Sake24 and BoE Private Clients Western Cape Barometer.

But although the barometer's main index contracted 1.6% year-on-year (y/y) in May and average consumers and small business enterprises in the province were becoming more cautious, figures like vehicle sales stil show some punch in the provincial economy here and there.

Motor sales, for instance, were 11.2% better than in May last year and visits to hotels and restaurants 3.8% up.

Economists.co.za economist Mike Schüssler, who collects and analyses the barometer data, said although vehicle sales figures are not rising as strongly as they did three to five months ago, the double-digit growth shows that consumer expenditure is still relatively strong.

The weak spots in the economy are illustrated by the barometer's stress index, which rose 4.3% y/y in May and was 2.1% up on three months before. Schüssler ascribes this to unemployment in the Western Cape which stood at 23.6% in May, its highest level in two years.

In April it was 23.2%. Summonses for debt were 12.1% up on the year before and inflation in the region 5.3%.

The Western Cape is still feeling the impact of the global economic downturn through the weakening of the domestic mining industry.

Although the province itself does not have much in the way of mining operations, the manufacturing sector which produces goods and services for the mining industry is affected if the industry struggles owing to the shrinking global demand for raw materials.

The barometer's manufacturing index lifted only 0.8%.

The metal-manufacturing subindex fell a sharp 7.1% and the timber industry – which includes the manufacture of building materials, paper and furniture – was 1.8% down. These two subsectors contribute 14.7% and 12.7% respectively to the province's manufacturing index.

The petroleum and food industries are still doing well and grew 3.9% and 4.2% respectively.

The construction index was 14.9% down because timber sales fell 12.5%, and 17% fewer building plans were approved. Residential construction figures were 11% off, but the non-residential side dropped almost 50%.

Nevertheless there still appears to be growth in the informal building industry because sales at hardware shops rose 15% in May. Schüssler reckons this is partly in response to the weaker economy – people are opting to add a room or make alterations to their home rather than buying or building a new one.

The agricultural index rose 0.7% even though meat production was a steep 16% down owing to an oversupply of red meat, in particular.

The wine subindex, which is drawn from sales and production figures, was 1.2% up on the year before. According to SA Wine Industry Information and Systems, domestic sales rose 4.3% from May last year to April this year.

Wholesale wine exports rose 20.9% from June last year to May this year, but packaged wine exports were 13.3% down.

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

To find out how your province performed, click here.

* Find more stories on this and other topics on our Facebook, Twitter and Google+ pages.

western cape  |  barometers  |  sa economy



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about: STEINHOFF

Steinhoff International, once the darling of fund managers, risks falling out of the JSE top 100.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

If SARB keeps interest rates the same this afternoon, how will this affect your personal finances?

Previous results · Suggest a vote