In January South African consumers were still opening their wallets for everything from food, clothing and hardware to cars, the Sake24 and BoE Private Clients provincial barometers being published today show.
The barometers also bring other good news: a massive 26% growth in internet usage thanks to smartphones; countrywide double-digit increases in activity in the transport sector; and in three of the provinces the struggling financial, property and business services index again clawed its way to its highest level since the recession.
“The latest barometer data look the best for a long time,” says Economists.co.za economist Mike Schüssler, who compiles the provincial barometers that measure the economic pulse of five of the country's provinces.
In four of the five provinces the overall index rose year on year (y/y), with Gauteng (11.8%) in the lead. But Schüssler expressed his concern over the precarious performance of the Eastern Cap e (– 3.4% y/y). This province depends heavily on its manufacturing sector and vehicle and component manufacturing declined somewhat. For the first time in six months the Eastern Cape manufacturing index was negative (-2.6%).
Production plods along
“While the consumer economy is on the trot, the production side of the economy is merely plodding along,” Schüssler warns.
In the other four provinces the manufacturing index rose only slightly. The Western Cape (2.7% y/y) performed best.
The countrywide construction sector is still under pressure. The Free State ( 38.2% y/y) is suffering the most, followed by the Eastern Cape ( 26.8%). Schüssler reckons the construction market will slowly begin to recover later this year.
The barometers show that property sales are eventually recovering, and the index for financial, property and business services is rising in four provinces. The Western Cape (9.9%) performed best.
Although the trade indices are still up between 5% and 8.3%, Schüssler warns that the economy cannot indefinitely depend on the consumer.
“The consumer can carry the economy for the next six to eight months, but the more productive side of the economy, such as mining and construction, will have to improve.”