Gauteng stuck in recession trough
Apr 08 2010 15:29
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Johannesburg - Gauteng province was worst affected by the world recession with little sign that it is able to extricate itself in the short term.
That's according to the Sake24 and BoE Private Clients' latest provincial barometers, which also showed the Eastern Cape, the Free State and the Western Cape were on the road to economic recovery.
The barometers are compiled by Economists.co.za economist Mike Schüssler from various time series data to measure economic activity in the four provinces. The February barometers have for the first time included the impact of state expenditure on provincial economies.
In the past, the barometers focused only on private sector economies but, with the new government data, the barometers now cover more than 90% of the provinces' economic activity.
The Gauteng barometer fell 0.9% year-on-year (y/y) in February. This decline exceeds that of January.
According to Schüssler, the Eastern Cape fared best after being particularly hard hit by the vehicle market downturn.
Promising manufacturing moves The Eastern Cape barometer rose 7.2% y/y, its biggest increase since the end of 2007. Y/y the province's growth index showed no increase, but even this 0% movement was better than the other three provinces' y/y declines in their growth indices.
Schüssler says the Eastern Cape's heavy reliance on the manufacturing and transport sector has helped it perform.
The manufacturing sector is generally regarded as one of the most important drivers of economic growth, especially as South Africa shakes off the effects of the recession.
The Bureau for Economic Research and Kagiso Purchasing Managers' Index - which indicates what is happening in the manufacturing sector - is positive for the fourth successive month in March, indicating expansion in the sector.
This should be confirmed on Wednesday, when Statistics South Africa publishes its manufacturing index for February. The consensus forecast is that manufacturing volumes will increase 4.9% y/y compared with January's 3.7%.
Schüssler says that the Free State and Western Cape have experienced shallower economic dips.