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Johannesburg - In May the Eastern Cape economy experienced a sudden slump and, like other provinces, it is seeing a slowdown in economic activity.
This is according to Economists.co.za economist Mike Schüssler, the compiler of the Sake24 and BoE provincial barometers.
In May the Eastern Cape barometer was 12.4% up on May last year, but 0.9% down on April and 2.1% lower than in February.
The Eastern Cape economic growth figure is not in itself bad, but is propped up far too much by government expenditure, said Schüssler.
In May government expenditure rose 21.2% year-on-year (y/y).
As before, the provincial economy is showing an over-dependence on transport and motor manufacturing.
A decline in spending on vehicles across the rest of the country was a setback for the Eastern Cape’s manufacturing sector. If interest rates rise, this will put even more pressure on the province because consumers will then have less money to spend on cars.
Apart from the Eastern Cape’s slower growth, the rest of the country is also slacking off.
According to Schüssler, the slower growth will not affect the retail sector too badly, but will have an impact on restaurant outings and other luxuries.
At sectoral level the agricultural industry scarcely kept its head above water in May, expanding only 0.6% y/y.
This figure is however an improvement on April’s contraction of 0.7% y/y, but much weaker than the 5.6% growth in January.
In April the manufacturing sector grew 5.5% y/y after showing good increases in April (8.7%) and March (7.3%).
The construction industry shrank by an enormous 30.2% y/y, the sector's biggest annual contraction.
- 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.
This is according to Economists.co.za economist Mike Schüssler, the compiler of the Sake24 and BoE provincial barometers.
In May the Eastern Cape barometer was 12.4% up on May last year, but 0.9% down on April and 2.1% lower than in February.
The Eastern Cape economic growth figure is not in itself bad, but is propped up far too much by government expenditure, said Schüssler.
In May government expenditure rose 21.2% year-on-year (y/y).
As before, the provincial economy is showing an over-dependence on transport and motor manufacturing.
A decline in spending on vehicles across the rest of the country was a setback for the Eastern Cape’s manufacturing sector. If interest rates rise, this will put even more pressure on the province because consumers will then have less money to spend on cars.
Apart from the Eastern Cape’s slower growth, the rest of the country is also slacking off.
According to Schüssler, the slower growth will not affect the retail sector too badly, but will have an impact on restaurant outings and other luxuries.
At sectoral level the agricultural industry scarcely kept its head above water in May, expanding only 0.6% y/y.
This figure is however an improvement on April’s contraction of 0.7% y/y, but much weaker than the 5.6% growth in January.
In April the manufacturing sector grew 5.5% y/y after showing good increases in April (8.7%) and March (7.3%).
The construction industry shrank by an enormous 30.2% y/y, the sector's biggest annual contraction.
- 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.
