Business, wholesale and manufacturing confidence in the Western Cape is higher than that of the remainder of South Africa, a new report, released by the Bureau for Economic Research (BER) on Thursday, has found.
The second-quarter economic report on the Western Cape economy, commissioned by the Western Cape government, showed that, despite a decline in business confidence from 49 index points in the first quarter of 2012, to 45 index points, the decreasing confidence was less pronounced than that of South Africa as a whole, which fell 11 index points to 41 during the same period.
Western Cape manufacturers recorded significantly higher confidence in domestic demand and production continued at a reasonable pace, jumping to 58 during the second quarter, from 47 in the prior quarter. National manufacturing confidence fell sharply during the first quarter of 2012, as domestic demand disappointed.
Western Cape wholesaler confidence rose by 20 index points, reaching 58 during the second quarter of 2012.
Building contractors’ confidence in the Western Cape stabilised in the quarter, decreasing 2 points to 23 index points, while national confidence fell 7 points to 24 in the second quarter.
However, while national retail confidence recorded a 22 index-point fall, Western Cape confidence experienced a 43 index-points fall, to 34 index points. The BER commented that the decrease was in line with the slowing household consumption expenditure growth momentum in the first quarter.
The second-quarter First National Bank/BER consumer confidence index found that national consumer confidence fell -3, from 5 index points during the first quarter – its lowest level in two years – indicating consumers' increasing pessimism about the state of South Africa’s economy and their own finances over the next year.
Western Cape consumer confidence also deteriorated from -12 in the first quarter, to -16 index points during the second quarter.
Further, the first quarter of 2012 saw the province create 5 000 jobs, but unemployment only remained moderately lower, at 22.8%, than that of the high national unemployment levels of 25.2%.
In addition, the report noted that the forecast recession in the eurozone was also expected to impact the province’s exports, 40% of which were destined for the European Union.
“This will likely mean that the Western Cape’s gross domestic product for 2012 is likely to be lower than what was recorded during 2011 with significant downside risks stemming from adverse global economic conditions,” the report commented.
Overall, the Western Cape economy was expected to continue outperforming the national economy, which registered growth of 3.1% year-on-year during 2011.