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Johannesburg - The economy and consumers are doing fairly well, but growth is still far from the levels seen three years ago.
Three of Sake24 and BoE Private Clients’ four provincial barometers showed year-on-year (y/y) growth in August.
The Eastern Cape, in particular, excelled with growth of 11.6%.
But on a three-year basis this province’s barometer was the only one that improved.
On a three-year basis the financial, property and business services index suffered the most in all four provinces, after the local housing market had reached a low last year and, despite record low interest rates, still showed slow recovery.
Economist.co.za economist Mike Schüssler, the compiler of the barometers, said that on a three-year basis there were still 61% fewer houses of between R50 000 and R10m sold countrywide.
The housing market had been in a massive bubble that had burst and it would take a long time to recover, he said.
Although house prices had swelled systematically over the past year, banks’ house price indices recently indicated that they were rising more slowly and some banks even reckoned that prices could again begin to fall.
Schüssler said house sales would not soon reach the levels of 25 000 to 26 000 seen a couple of years ago, because the sales volumes were simply not there.
Most people were wary of purchases like homes and preferred to buy items like television sets or cars.
The country is not really in a period of growth, but rather in a recovery phase until it can regain the highs of the past, said Schüssler.
The provinces’ government indices, which reflect expenditure by the local, provincial and national governments, are the only ones in the four provinces that lifted on a three-year basis.
The Western Cape government index grew the most, at 47.9%.
Gauteng, the Western Cape and the Free State’s growth indices also grew briskly in August, but the barometers were pulled down by economic stress indices, which measure negative factors like inflation, interest rates and unemployment.
The Free State was, however, the only province with exceptionally higher economic stress, with 7.2% y/y growth.
A stress increase of 2% or 3% is no cause for concern, but one of 6%, 7% or 8% is certainly a problem, said Schüssler.
Inflation declined much more than expected and falling interest rates also helped lower levels of stress.
Lower inflation, together with a strong rand, also helped the province’s trade indices to grow, driving sales as imported products, in particular, became cheaper.
Schüssler said the coastal provinces were apparently recovering more quickly than those inland, partly thanks to the rest of Africa’s import and export activities through the provinces’ ports.
But he warned that the Eastern Cape economy was still too dependent on the vehicle manufacturing industry, which contributed 45% to 48% to the province’s overall manufacturing sector.
When the province’s economy suffered in 2008 and 2009, this was caused by the vehicle industry and now it was the very industry pushing growth, he said.
It is necessary to focus on sectors such as tourism as well, because a drop in vehicle sales drags down everything else in the province, he said.
For business news in Afrikaans, go to Sake24.com.
For more news on the provincial Sake24/BoE Private Clients barometers, go to www.fin24.com/barometer.
Three of Sake24 and BoE Private Clients’ four provincial barometers showed year-on-year (y/y) growth in August.
The Eastern Cape, in particular, excelled with growth of 11.6%.
But on a three-year basis this province’s barometer was the only one that improved.
On a three-year basis the financial, property and business services index suffered the most in all four provinces, after the local housing market had reached a low last year and, despite record low interest rates, still showed slow recovery.
Economist.co.za economist Mike Schüssler, the compiler of the barometers, said that on a three-year basis there were still 61% fewer houses of between R50 000 and R10m sold countrywide.
The housing market had been in a massive bubble that had burst and it would take a long time to recover, he said.
Although house prices had swelled systematically over the past year, banks’ house price indices recently indicated that they were rising more slowly and some banks even reckoned that prices could again begin to fall.
Schüssler said house sales would not soon reach the levels of 25 000 to 26 000 seen a couple of years ago, because the sales volumes were simply not there.
Most people were wary of purchases like homes and preferred to buy items like television sets or cars.
The country is not really in a period of growth, but rather in a recovery phase until it can regain the highs of the past, said Schüssler.
The provinces’ government indices, which reflect expenditure by the local, provincial and national governments, are the only ones in the four provinces that lifted on a three-year basis.
The Western Cape government index grew the most, at 47.9%.
Gauteng, the Western Cape and the Free State’s growth indices also grew briskly in August, but the barometers were pulled down by economic stress indices, which measure negative factors like inflation, interest rates and unemployment.
The Free State was, however, the only province with exceptionally higher economic stress, with 7.2% y/y growth.
A stress increase of 2% or 3% is no cause for concern, but one of 6%, 7% or 8% is certainly a problem, said Schüssler.
Inflation declined much more than expected and falling interest rates also helped lower levels of stress.
Lower inflation, together with a strong rand, also helped the province’s trade indices to grow, driving sales as imported products, in particular, became cheaper.
Schüssler said the coastal provinces were apparently recovering more quickly than those inland, partly thanks to the rest of Africa’s import and export activities through the provinces’ ports.
But he warned that the Eastern Cape economy was still too dependent on the vehicle manufacturing industry, which contributed 45% to 48% to the province’s overall manufacturing sector.
When the province’s economy suffered in 2008 and 2009, this was caused by the vehicle industry and now it was the very industry pushing growth, he said.
It is necessary to focus on sectors such as tourism as well, because a drop in vehicle sales drags down everything else in the province, he said.
For business news in Afrikaans, go to Sake24.com.
For more news on the provincial Sake24/BoE Private Clients barometers, go to www.fin24.com/barometer.
