Fixed investment in KwaZulu-Natal had a surprisingly good month in August thanks to certain big projects in the transport and energy sectors which started to take shape; these projects require equipment. The latest KwaZulu-Natal total investment index, as compiled by Mike Schssler of Economists.co.za, increased 6.3% year-on-year, the best growth in five months. Quarter-on-quarter the investment index was up 4.5%. Aside from some big projects which helped to boost the investment index, businesses were also starting to adjust to the weaker rand-dollar-exchange rate and started to invest in imports in certain sectors again. Despite the good news for overall investment in KwaZulu-Natal, the sectors which have been suffering for most of the year, like building and construction, are still struggling and growing at a marginal pace.

Transport equipment investment surprises
Investment in transport equipment was one of the big drivers behind the improved growth in total fixed investment in KwaZulu-Natal. After some recent months of decline the transport index grew 7.2% year-on-year, the best growth in nine months, and was up 6.9% quarter-on-quarter.

Investment in land transport equipment grew 10.9% after not growing in double- digits for four months.  Some projects, like energy and mining, in KwaZulu-Natal are making use of heavy trucks and machinery as investment in extra-heavy vehicles grew almost 20% from a year ago. However, while businesses and investors in big projects seem to be doing well, the same cannot be said for smaller businesses, judging from their vehicle purchases. Investment in light commercial vehicles fell 12% from a year ago, which shows small businesses are not doing that well and are still feeling the pressure in the economy, whilst big businesses are investing.  Investment in air and sea transport equipment was down only 2.5%, which was a welcome improvement after five months of double- digit decreases.

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Dr Clive Coetzee

General Manager:  Infrastructure Management and Economic Services

KZN Provincial Treasury

Economist (PhD UKZN)

033 897 4538

http://www.kzntreasury.gov.za/