The Gauteng economy is slowing down as several industries experience a drop in business-activity levels, said the Gauteng Business Barometer (GBB).
Spokesperson Mike Schüssler said the GBB for September dipped by 7% to 140 index points when compared with the same month last year.
Schüssler said: ”The index also shows a marginal 0,1% decline when compared with activity levels in August.
”September’s performance echoes a continuing downward trend from the beginning of the year, mainly due to higher interest rates and inflation,” he said.
According to the GBB, the Gauteng economy is feeling the strain due to the higher interest rates.
Schüssler said: ”The GBB has foreseen the slowdown and negative effects of higher inflation and interest rates.
”Several sectors such as the broad trade and manufacturing sectors remained strong, but some sectors, like the financial and business-services sectors, experienced significant declines in activity levels,” he said.
GBB’s economic stress index shows a decline in the province’s economy, from 5,6% in September last year and a 1,3% decline when compared with August.
”This means business conditions are becoming less favourable and that businesses should look at other opportunities to boost income levels,” said Schüssler .
Standard Bank chief economist Goolam Ballim agreed with the BGG statement that business has slowed down due to increasing interest rates.
Ballim said: ”The Gauteng economy will remain under pressure following the recent interest-rate hike, as financial costs take more out of the wallets of consumers. ”
The cumulative impact of the tightening interest-rate cycle would predominantly be felt early next year, he said.
According to Standard Bank, retailers of durable goods such as electronic and household equipment have already felt the pinch, as annual growth rates in this sector of the retail market have slipped.
Ballim said: ”Durable goods represent about 20% of total retail sales, and I expect sales growth will drop to near zero imminently. It is possible that this segment may experience negative annual growth, as the automotive market is experiencing.”
”However sales of semi-durable goods such as clothing and footwear are growing at double-digit rates.
”The current slowdown can be seen as a soft landing. Nine years ago we experienced a hard landing when interest rates were hiked from 18,25% to 25,5% over four months. The current interest-rate cycle is more measured and the experience is not as punishing,” he said.
The GBB is the first provincial business index in South Africa and a unique statistical index that measures the economic activity in the province on a monthly basis.
Statistics are based on 19 sets of data dating back to 2002. — Sapa