KZN’s economy picks up

2011-12-10 00:00

THE KwaZulu-Natal government has started turning off the taps, but greater spending by the private sector lifted the province’s economy in October.

The Sake24 and BoE Private Clients KwaZulu-Natal Barometer, a unique index that measures economic activity in the province, rose 8,1% year on year in October. In September it was 7,3% up.

The government index rose only 4,7% year on year, after having shot up more than 20% earlier in the year.

Said economist Mike Schüssler of Economists.co.za, who compiles the barometer: “The slowdown in government expenditure should be welcomed because earlier this year it seemed to be reaching excessive levels.”

He pointed out that the money spent by government comes from taxes and double-digit increases are not affordable in the long run.

The transport index (16,2% up year on year) was the star performer in October.

In the same month nationwide transport rose 6,8% and freight volumes through the Durban and Richards Bay ports 6,4%.

The countrywide manufacturing sector has started to recover, and KZN is no exception. In October its index was 1,6% up year on year. The local motor and component manufacturing industry improved a phenomenal 50% year on year.

Schüssler said the weaker rand certainly stimulated exports and the end of the strike season also contributed to the improvement.

The construction sector (4,8% up year on year) is showing signs of recovery, largely helped along by growth in the property market. Property transfers advanced 10,6%, home loans eight percent and asset management 8,5%.

Advertising sales (20,2% stronger) also showed good improvement.

The trade index (6,3% up) recorded the strongest growth for the past five months. This was partly stimulated by a 30,4% increase in vehicle sales.

“An increase in consumer expenditure is important, especially considering that government expenditure is starting to taper off, but in the new year consumers can again tighten their belts,” said Schüssler.

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