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SA industries taking strain in low growth environment
SA industries taking strain in low growth environment

SA industries taking strain in low growth environment

ECONOMIC NEWS

Fin 24 - Jul 18th 2016, 15:31

Cape Town - With economic growth predicted at its lowest levels since 2009, the various industries in South Africa are also feeling the pinch, with turnover declining by 5.1% in the first quarter of 2016. 

According to Statistics South Africa’s quarterly financial statistics survey the biggest decline in turnover was experienced in the construction industry where turnover contracted by 10%, followed by manufacturing with a decline of close to 7%. The third biggest loss in turnover was experienced in trade with a 6.2% decline.

Statistics South Africa conducts a quarterly survey of the financial statistics of the following industries in South Africa:

- construction
- manufacturing
- trade
- mining and quarrying
- transport, storage and communication
- real estate and business services
- electricity, gas and water supply
- community, social and personal services.

Six out of the eight industries surveyed experienced contractions between the fourth quarter of 2015 and the first quarter of 2016. Only the electricity, gas and water supply sector as well as community, social and personal services saw an uptick in turnover of 2.1% and 1% respectively.

Similarly, capital expenditure on property, plant and equipment fell by 3.8% in the first quarter of 2016. The largest decline was in the transport, storage and communication industries at 16.4%, followed by real estate and other business services (excluding financial intermediation and insurance) at 12.9% and manufacturing at just over 12%.

A substantive increase in capital expenditure was recorded in the electricity, gas and water supply industry at close to 46%, and a slight uptick in construction at 1.5%.

Individual financial terms can provide limited insight into the financial state of affairs, and therefore accounting ratios are a more accurate reflection of the health of a specific business.

One such an accounting ratio is profit margin, which is calculated by dividing the profit or loss before tax by turnover, which in turn measures how much of each rand earned by the industry is translated into profits.

Statistics SA found that the average profit margin for the South African formal business sector declined – from 0.09 between June 2006 and September 2008 to 0.05 between December 2013 and March 2016. From Fin24 

Read more about: statssa | sa economy | industries

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