Consumers boost Western Cape
Fin24 - Apr 10th 2012, 08:05
Cape Town – The overarching economic picture in the Western Cape is positive, with some of the strongest consumer spending in the country.
Economic growth could well become somewhat arrested in the course of the year, but it will still be positive, said Economists.co.za economist Mike Schüssler, who compiles the Sake24 and BoE Private Clients monthly Western Cape Barometer.
The main index is still positive year-on-year (y/y) with an increase of 1.8%, 6.1% up on three months ago.
In the latest barometer reading for February the Western Cape indeed achieved growth in all the underlying indices compared with three months previously, indicating a stronger trend.
The agricultural, mining and manufacturing indices were respectively 6.8%, 8.2% and 2.2% firmer than three months before.
The transport and trade indices, as well as that for finance, property and business services, improved by 9.2%, 4.6% and 3.9% respectively compared with three months previously.
"The agricultural index made a definite about-turn. The February fruit sub-index may still be negative y/y, but it's less negative than it has been for a long time," said Schüssler.
Cheery news from wine sector
The wine sub-index is positive – 9.3% up – after having long been negative. Furthermore, more fish is apparently being caught, because the fish index is still rising and it was 11.6% up on February last year. The wheat index has shown growth for six successive months and is 11.4% stronger.
Schüssler reckoned it seems as though the construction sector is also getting into gear sooner than expected.
Although still some 30% weaker than three years ago, when it experienced a boom, it is recovering slowly but surely. He said that although people are not necessarily buying new houses, they are making additions to or refurbishing their properties.
Consumers in the Western Cape are, according to Schüssler, strong. The Western Cape trade index is 7.1% up on the previous year and 8.5% up on three years before.
The V&A Waterfront sales figures show retail sales are 18% up y/y – much better than the national retail sales figure of 3.9% for January announced by Statistics South Africa.
Alex Kabalin, head of retail at the V&A Waterfront, said strong trading is also anticipated this month owing to encouraging feedback from tourism bodies, as well as growth over the past few months.
Tourism in the Western Cape is particularly strong, certainly according to the barometer. This supports growth at restaurants and hotels.
Vehicle sales remain positive, with an increase of 7.5% y/y, but are down on the double-digit growth experienced last year. This is possibly the first sign that Western Cape consumers are also spending more cautiously.
The transport index indicates that Cape Town and Mossel Bay ports handled bigger volumes, but was hamstrung by a downturn at Saldanha.
The communications index, which falls under the transport index, is considerably stronger countrywide.
"I expect that the Western Cape will remain positive even though consumers will be under greater pressure owing, inter alia, to higher fuel and electricity prices.
"This may be a year of slower growth," said Schüssler.
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