KZN Provincial Treasury - KZN Business Barometer September 20132013-11-13
At first glance the KwaZulu-Natal economy seems to be doing quite well, but a closer look at the sub-sectors of the province’s economy shows things are not all that positive. The KwaZulu-Natal barometer, as compiled by Mike Schüssler of Economists.co.za, declined year-on-year for the 12th consecutive month, although the 2.3% decline was somewhat smaller than that of the previous two months. Month-on-month the barometer was up 1.2%, but quarter-on-quarter it was down 0.9%.
Economic stress high
Economic stress in KwaZulu-Natal is still high, although unemployment and inflation declined. The 5.8% inflation for the province in September is still close to the 6% upper band of the Reserve Bank’s target range. While the KwaZulu-Natal growth index was up 3%, the best growth in more than a year, the effect of inflation on the economy is material as it weakens growth. The stress index was up 5.5%, and though this was a smaller increase than in the previous two months, the stress index still had a hugely negative effect on the barometer. If it was not for the high levels of the stress index the total barometer would not have been negative.
Strikes continue to take its toll
Aside from the fact that economic stress is still increasing, many industries also did not do too well in September and the effect of the earlier strikes have started to show in sectors like manufacturing and retail in most provinces. Because many of the strikes lasted more than four weeks, the negative effects will continue to trickle down into next month’s barometer as well.
The KwaZulu-Natal agriculture index has been positive for five out of the last nine months now and although September is usually not a good month for agriculture in the province, it grew 2% year-on-year instead of the usual decrease in September. There was also an increase in employment in agriculture, according to Statistics South Africa. While the decrease in livestock production still seems to be evident in some other provinces, livestock production has not been doing too badly in KwaZulu-Natal and has actually been on the rise for quite a while now.
Mining index increased
Mining was up by 7.8% year-on-year, 8% month-on-month and 24.7% on a quarter ago. The mining data in this barometer comes a year after the Marikana shootings and its impact on the sector last year when mining declined in most provinces. While some of the year-on-year increase in mining was due to the base effect created by last year’s negative events, the almost 20% increase in the production of non-metallic minerals â€" which include, amongst others, ceramics, cement, glass and lime â€" also contributed. Coal, which makes up the bulk of mining in KwaZulu-Natal, declined 1.3%.
Year on year growth in manufacturing
Several sub-sectors of manufacturing were hit by the strikes in August and September. The KwaZulu-Natal manufacturing index still grew 2.8% year-on-year and 2.4% quarter-on-quarter, but it was down 0.1% on a month ago. The strikes in the vehicle manufacturing and components sectors had a particularly negative effect on manufacturing and the production of motor vehicles, parts and accessories fell 25% from a year ago. The strike of petrol attendants affected the vehicle sub-sector and trade negatively, contributing to September not having been a good month for manufacturing, even though the index was positive. Food and beverage manufacturing was down 13%, the production of petroleum products was down 9%, radios and televisions were down 5% and the production of furniture declined 1%.
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