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Cape Town - The Western Cape economy may well be losing some momentum but it still has some muscle, said Economists.co.za economist Mike Schüssler about the latest results of the Sake24 and BoE Private Clients' Western Cape Barometer.
In October the barometer’s main index rose 6.7% to 106.1 index points year-on-year (y/y). The growth index was 7.5% higher at 115.2 index points, while the economic stress index – which indicates how easy or difficult it is to do business in the province – was 0.7% up, something that did not really concern Schüssler.
He ascribed these rises to higher unemployment in the province. In October, inflation in the Western Cape was at 3.5%.
Schüssler said the economy was not creating sufficient jobs, but this was a countrywide problem and not limited to the Western Cape.
In October all the economic sectors grew y/y, other than the agricultural index, which was 7.5% down at 98.5 index points, and construction which contracted by 9.2% to 93 index points.
The electricity index was a mere 0.9% up on the previous year and 1.2% down on the previous month. In the three months to end-October it was 2.6% lower than in the preceding three months. Schüssler attributed the trend to sharp rises in electricity tariffs and municipal taxes.
Households, small business enterprises and large industries are increasingly doing everything in their power to soften the impact of the stiff increases in energy prices. Businesses are investing in more energy-efficient equipment, and household appliances like dish-washing machines or refrigerators are being marketed on the strength of their efficient energy consumption.
Schüssler said the electricity index could therefore no longer be regarded as a leading indicator.
Although the manufacturing sector was still showing sluggish growth – 3.8% in October compared with a year ago, but a contraction of 0.6% compared with September and a 0.3% decline compared with the previous three months – Schüssler expected things to improve in November.
The manufacturing sector was still performing in various ways. Food production was doing well, but metal production and the motor industry were struggling.
State expenditure continued to grow briskly, but Schüssler was worried that this was not sustainable.
Expenditure by the provincial government in October was 30% higher than a year ago, and municipal expenditure 39% up, while national expenditure was only 2.5% higher. Total state expenditure was 25% up.
- 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.
