While business activity levels in Gauteng slowed down in March, overall performance remains at a high level and businesses in virtually every sector should experience healthy activity, according to the latest Gauteng Business Barometer (GBB).
The barometer for March slipped by 1,7% to 149,4 index points, compared with February’s 151 index points.
According to the GBB — the first index of its kind in South Africa, which was developed by Gauteng Business in partnership with economist Mike Schüssler and Standard Bank — activity levels are 5,5% lower when compared with March of last year.
“Overall activity levels remain healthy. It is higher negative factors such as inflation and interest rates that impacted negatively on several industries,” says economist Mike Schüssler.
“We expected a slowdown in consumer spending due to these factors but it seems that consumers have not left their wallets at home. I expect this trend to continue until the interest-rate cycle takes another turn.”
On an industry basis, manufacturers and traders boasted healthy performances. “The construction industry experienced spectacular growth,” Schussler says. “Last month’s activity level was 27,5% higher than in March 2006, and 6,5% higher when compared with February of this year.”
Activity levels in the trade sector for March, which includes retailers, wholesalers and tourism businesses, declined marginally with 1,2% compared with February this year — although it was 9,6% higher than in March last year.
Although activity levels in the manufacturing sector in March slipped by 1% when compared with February, they remained 7,2% higher than the levels seen in March last year. The financial and businesses sectors were 2,4% up on February and 2,6% higher on March last year.
Goolam Ballim, Standard Bank chief economist and key interpreter of the GBB, says many businesses have been surprised by their high-growth rates of the past few years.
“While the current environment provides a fertile opportunity for businesses to boost long-term prospects, businesses must not become complacent in a benign environment. Generally, enterprises have up-scaled infrastructure to expand production capacity and the resulting debt service repayments have trimmed profits. It would be prudent to manage debt levels to ensure sustained profitability.”
“Businesses should not shirk on productive investment while being liberal with personal drawings. It is a classic example of trimming the roses and watering the weeds,” says Ballim. — I-Net Bridge