KZN shows strongest growth

 Bloemfontein - In March government expenditure made a healthy contribution to the Sake24 and BoE Private Clients KwaZulu-Natal Barometer – the strongest (14.4%) year-on-year (y/y) since the barometers were created, leading to a 15.8% rise in the overall index.

The government index, which measures spending by national, provincial and local government, showed a massive 43.1% y/y rise in March.

Economists.co.za economist Mike Schüssler, the compiler of the KwaZulu-Natal barometer, said that because government spending makes a large contribution to the KwaZulu-Natal economy this high figure has a significant effect on the province’s growth at the end of the government fiscal year - a pattern that will probably be repeated.

In March the transport and communications index also showed a strong 17.2% rise. The use of cellphone minutes increased by 37%, land transport, measured from diesel sales, was 3.1% up and King Shaka airport passenger numbers rose 10.8%, which also had a positive impact on the province’s tourism industry.

The financial, property and business services index made the second-largest contribution to the province’s economy.

Schüssler said it was therefore a positive sign that this sector had grown a sturdy 15.1% y/y. In the period advertising sales were 57.1% up, indicating that business activity in the province was also on the increase. Property transfers rose 21.8% and new mortgage loans granted 17.4%.

Consumers still do not feel free to incur debt, other than home and car loans, and fewer hire purchase agreements were concluded. But the province’s trade index was still 8.1% up on March last year.

Vehicle sales were 23.2% higher, their smallest increase in recent months. Schüssler expects the figure to level off in coming months, although growth in the tourism sector could boost car rental demand.

The KwaZulu-Natal stress index, an indication of the pressure experienced by businesspeople, fell for the seventh successive month and was 1.3% lower in March than in March 2010.

Schüssler said economic stress in the province was still no cause for concern, but it could be expected to rise again in coming months because the national inflation rate was also rising and exerting pressure on interest rates.

- 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.
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