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This is the conclusion of Mike Schüssler, independent economist and compiler of the Sake24 and BoE Private Clients’ Western Cape Barometer.
Schüssler’s explanation for the speed bump in the recovery process after the recession is that consumers are still under great pressure.
The Western Cape barometer has grown by 112 index points to 5.7% on an annualised basis.
Some of the sectors that fared well were the commercial sector, financial services, transport and mining.
However, parts of the commercial sector, especially wholesale and certain retail sub-sectors, are still experiencing problems.
Other industries that are also still struggling are construction and manufacturing. As a result of the recession and the property market downturn, fewer houses have been on the property market for quite some time.
This dampened demand for newly-built houses, Schüssler said. He expects construction to mark time for quite a
while yet
The new index, which reflects state spending, grew by 5.2% to 161 index points in March compared with a year ago.
Schüssler said that spending on items like roads, personnel, and contractors by local authorities, the provincial government and parts of the national government has certainly had a positive impact on the regional economy.
The barometer’s stress index, which reflects stress factors like inflation, interest rates and unemployment in the economy, fell by 6.4% to 106 index points in March - good news for business. The decline is thanks to the fall in inflation and interest rates.
The commercial sector fared well in general in March. Retail sales look slightly better.
Pharmaceutical products showed almost no fall in sales throughout the recession and food sales are showing growth, but sales of hardware and furniture are still struggling.
For the first time in more than two years, activity levels at hotels and restaurants are once again positive.
Motor sales in the Western Cape also look considerably better than a year ago, when they fell by 40%. In March, they were only 1.7% lower than the previous year.
Schüssler said it’s as if the economy is just starting to get a foothold for full growth again, but certain parts of the economy have not yet reached that point.
The latest credit extension figures show a wait-and-see attitude among businesspeople, Schüssler said.
Applications for new home loans went up, but the category for loans and advances, which mostly refers to loans by businesses, showed no growth. “It’s as if the country took a breather in March,” Schüssler said.
- Sake24.com
