By Patrick Cull
The latest Port Elizabeth business confidence index (PEBCI) points to “a probable delay in the achievement of a lower turning point for the index with the possibility of only a muted recovery thereafter through 2010”.
The index, which covers Nelson Mandela Bay, is compiled by Neal Bruton of RGT Smart Ltd on behalf of Percci and is a composite index tracking the performance of 15 key economic indicators chosen from those available that are “believed to best reflect the business mood in the PE/Uitenhage area”.
The report released on Monday notes that the underlying trend cycle of the index had continued “its slow but steady decline through September”.
“While supported by positive trends in the stock exchange, exchange rate, price of gold, inflation and interest rates, the remainder of the indicators are all reflecting decline.”
Bruton states that while the indications are that the country’s economy “is slowly emerging from recession” an improvement in the current economic circumstances “is likely to be slow and hesitant”.
“Households remain heavily indebted, household income has declined and employment levels have once again fallen sharply during the third quarter. Consumer and business confidence remains low.
“These circumstances are reflected not only in a reluctance by consumers to spend with real retail sales falling by an annual rate of 7% in August, but also in a reluctance to borrow with credit extension to the private sector having fallen to 1,5% in September, the lowest level in 43 years.”
As far as the PEBCI is concerned, five of the components improved and 10 reflected decline.
The indicators that supported the index through August include a strengthening in the trend cycles of both the rand/dollar exchange rate and the price of gold; an ongoing decline in the trend cycle of the local rate of inflation for the municipality and the prime rate of interest; and growth in the trend cycle of the JSE all-share index.
Against that the indicators that contributed to the decline in the index included the trend cycles in the number of new cars sold in the city, as well as in the total national new vehicle market in the country, “both of which continue declining”.
In addition, the trend cycles in the real value of both exports and imports were declining and the trend cycle in the real value of seasonally adjusted manufacturing sales in the country was declining but at a slowing rate.
The trend cycles of the real value of building plans passed and buildings completed in the municipality were also declining as were the trend cycles in real retail sales in the Eastern Cape and in the number of passengers arriving at the PE Airport.
