Category Economy
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Still Up - BER

22 June 2005 Angelo Coppola

The current condition of the SA macro economy – based on the Buro of Economic Result (BER) surveys, is, according to George Kershoff, deputy director of the BER, looking rosy.

Business confidence increased and is higher than the first and third quarter of last year, although slightly below the 23 year high during the last quarter, sys Kershoff.

BCI – Business Confidence Index – showed that 8 out of 10 people are satisfied with current business conditions. Retail and wholesale confidence bounced back in q2. It remained high in the building and motor trade.

The interest rate cut lifted confidence, while the weaker rand also lifted confidence in terms of cheaper imports.

There were some dampeners, including the petrol price increase, and its effect.

The growth rate was expected to come down in the retail numbers, following the extraordinary sales during q4 of 2004. The biggest surprise was the non-durables which rebounded strongly. This will continue into the next quarter.

In terms of the banks – the biggest source of income came from fee income. The biggest development was the reduction in the number of non-performing loans and an increase in credit requests.

There were sharp net inflows in q1, and into q2. This is based on the activity on household incomes and the performance of the JSE, all based on the performance of the JSE, while RAs and other endowment policies loose popularity, with an increase in surrenders.

The life offices have had a difficult time of it lately.

There has also been a turnaround in employment numbers, especially in the building sector and the retail wholesale sector. Manufacturers were reducing their numbers.

Consumer spending increases, for low and high income earners. High consumer demand and employment conditions continue to underpin confidence. The current conditions have benefited the financial services sector.

On the fixed investment side, including the building and civil engineering sectors, showed some activity. The downturn is linked to the consumer goods sector, while the capital goods sector is performing well – machinery and transport.

The cutback had an adverse impact on the wholesales of consumer goods.

On the building sector, showed residential building activity in q2 remained strong. Insufficient demand is picking up over the last quarter and he questioned whether this could be sustained.

In terms of non residential activity, he says that activity remains very strong, although players are not positive that this will continue in q3. This sector remains positive, generally.

On the export front it remains a sad picture. These continue to contract, and this is all dependent on the rand.

The implication for the overall GDE was that it was on par to q1. There wont be a repeat of the overall growth rates of last year. On the question of domestic selling prices of consumer goods, was overshadowed by what is happening on basic foodstuffs.

Maize prices came down sharply and an over-supply, which spills over into the manufacturing sector, spilling over to the consumer - in theory. This turned around in q2 in fact. Consumer goods prices and wholesale sector or the wholesale sector didn’t reflect the price drops.

Profits and confidence lifted as they increased profit margins. This is a price thing and not a volume thing. This turnaround follows a year in which the likes of Massmart and the other competitors, saw profit margins under pressure to move the goods.

He did caution that this was only evident in one quarter and if it continues it will have an effect on inflation and food inflation, specifically.

Quick Polls


The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?


Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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