Retail Trade Quarterly analysis of activity in retail, wholesale and motor trade Fourth quarter 216 214Q1 12 March 214 Please refer to the glossary on the BER s website for explanations of technical terms.
Editor: Harri Kemp Linette Ellis Email: jhkemp@sun.ac.za Tel: +27 21 887 281 Fax: +27 21 883 311 Technical assistance: Ester Manefeldt Language Editor: Jenny Tucker Stellenbosch University This publication is confidential and only for the use of the intended recipient. Copyright for this publication is held by Stellenbosch University. Although reasonable professional skill, care and diligence are exercised to record and interpret all information correctly, Stellenbosch University, its division BER and the author(s)/editor do not accept any liability for any direct or indirect loss whatsoever that might result from unintentional inaccurate data and interpretations provided by the BER as well as any interpretations by third parties. Stellenbosch University further accepts no liability for the consequences of any decisions or actions taken by any third party on the basis of information provided in this publication. The views, conclusions or opinions contained in this publication are those of the BER and do not necessarily reflect those of Stellenbosch University. For more information on the BER s services please visit www.ber.ac.za
Executive summary The 216Q4 BER Retail Survey indicates that business confidence among retailers fell back after the handsome recovery recorded in 216Q3. As in previous survey rounds, there were mixed results for the various subcategories. In all, low levels of consumer confidence, subdued growth in consumers real disposable income and tighter fiscal policy should continue to weigh on retail sales growth over coming months. The 216Q4 BER Retail Survey suggests that conditions in the retail sector remain tough despite a mild recovery in sales volume growth relative to 216Q3. In all, 41% of retailers reported that trading conditions deteriorated relative to 215Q4, with only 34% indicating satisfaction with prevailing business conditions. Conditions improved somewhat in the semidurable goods category following a weak performance in 216Q3, while activity remained relatively well supported in the non-durable goods category. In contrast, the durable goods category remains under pressure in the face of slowing credit growth and heightened uncertainty about South Africa's economic prospects. Disconcertingly, retailers expect conditions to deteriorate in 217Q1. Higher prices, weak employment growth and subdued credit extension, not to mention the high likelihood of significant increases in personal income taxes in the February 217 national budget, should keep a lid on retail volume growth for the foreseeable future. Wholesaler confidence held up reasonably well in 216Q4 despite a deterioration in overall profitability in the sector. In all, 53% of wholesalers reported being satisfied with prevailing trading conditions. There were mixed results for the various subcategories, with nonconsumer goods wholesalers outperforming their peers in the consumer goods category. Mirroring results for the retail sector, wholesalers expect tough trading conditions to persist into 217. As has been the case for numerous survey rounds, new vehicle trader confidence remains at depressed levels as deteriorating volumes, elevated stock levels and higher prices continue to weigh on confidence. In contrast, activity in the used vehicle and spare parts and maintenance categories remains well-supported, confirming the shift away from the purchase of new vehicles and towards maintaining and/or repairing existing cars, or purchasing cheaper second hand vehicles. Retail sales volume growth slowed notably during the first nine months of 216, from 4.3% y-o-y in December 215 to 1.4% y-o-y in September 216. The latest survey results suggest that, while a marked further deterioration is not on the cards, retail volume growth remained dismal during 216Q4. Underlying consumer demand remains weak on the back of subdued growth in consumers disposable income, tighter credit conditions and low consumer confidence levels. This should keep a lid on retail sales volume growth over coming quarters. This report was completed on 1 December 216. Please refer to the glossary on the BER s website for explanations of technical terms.
Contents Introduction... 1 Summary of the 216Q4 trade sector survey results... 2 Drop in retailer confidence points to subdued festive season... 2 Non-durable goods retailers hold up, semi-durables recover... 3 Wholesaler confidence steady despite lower profitability... 6 Non-consumer goods category improves, consumer goods wholesalers struggle... 7 New vehicle trader confidence remains subdued... 8 Concluding Remarks... 9 BER Retail Trade Survey data... 1 Retail trade... 1 Wholesale trade... 22 Motor trade... 38 Technical note... 42 i
Introduction The 216Q4 Retail Trade publication covers two surveys related to consumer spending, namely the FNB/BER Consumer Confidence Survey 1 and the BER Retail Survey. It presents a quarterly analysis of consumer expectations and activity in the retail, wholesale and motor trade sectors. Growth in real consumer spending measured just.9% year-on-year (y-o-y) in 216H1, while retail sales volume growth slowed to.9% y-o-y in 216Q3 from 3.3% y-o-y in 215. The consumer continues to face a number of headwinds, including low consumer confidence levels, lacklustre employment growth, higher interest rates, tighter credit conditions and less supportive fiscal policy. Subdued festive season on the cards The 216Q4 BER Retail Survey suggests that total retail sales volume growth (and real consumer spending growth in general) is expected to remain relatively subdued over the festive season, with little improvement expected in as we head into 217. After rebounding sharply in 216Q3, business confidence among retailers fell back during the fourth quarter. Underlying activity indicators do not fully support the drop in confidence, but it is clear that business conditions in the retail sector remain tough. While semi-durable goods retailers recorded better results in 216Q4, this improvement follows weak a performance in the first nine months of 216. Additionally, non-durable and durable goods retailers came under renewed pressure over the quarter. Retail sales declined by.2% in the three months to September, 2 while wholesale volumes remained flat, suggesting that underlying consumer demand remains weak. The latest survey results do suggest that conditions improved somewhat during 216Q4, but a meaningful acceleration in volume growth is not on the cards. We now proceed with a detailed discussion of the 216Q4 survey results. 1 The 216Q3 FNB/BER CCI results will be published on 8 December. The 216Q4 results will be available in January 217. 2 Quarter-on-quarter 1
Summary of the 216Q4 trade sector survey results Drop in retailer confidence points to subdued festive season Retailer confidence declines After rebounding sharply in 216Q3, business confidence among retailers fell back during the fourth quarter (see Figure 1 below). According to the latest BER Retail Survey 3, 34% of retailers reported being satisfied with prevailing business conditions in 216Q4, down from 43% in Q3. While underlying activity indicators do not fully support the drop in confidence, it is clear that business conditions in the retail sector remain tough. This is reflected in the fact that a net majority 4 of 41% of retailers reported that business conditions deteriorated relative to a year ago. Retail sales volume growth expanded by 4% year-on-year (y-o-y) in 215Q4. However, the latest survey results suggest that a much more subdued festive season is on the cards for 216. Figure 1: Retailer business confidence declines in 216Q4 % satisfactory net balance 1 4 9 3 8 2 7 1 6 5-1 4-2 3-3 2-4 1-5 -6 27Q1 28Q2 29Q3 21Q4 212Q1 213Q2 214Q3 215Q4 217Q1 Business Conditions Index (rhs) Business Confidence Index Source: BER Once-off events boosted sentiment in Q2 As mentioned in the previous edition of this publication, the 216Q3 survey period was characterised by specific events which likely only had a fleeting positive impact on confidence. The local government elections (free, fair and without major disrupting violence), the strengthening of the rand exchange rate and the drop in fuel prices may have boosted confidence temporarily during the quarter. In contrast, actual activity levels in the retail sector dipped sharply in 3 The fieldwork for the 216Q4 survey was conducted between 17 October and 21 November 216. 4 A net majority indicates the percentage of respondents reporting an improvement in business conditions compared to the same quarter of the previous year less the percentage reporting a deterioration in business conditions. 2
216Q3. According to Statistics South Africa, retail sales volume growth measured a paltry.9% y-o-y in 216Q3, with turnover growth moderating to 7.7% y-o-y from 8.4% in Q2. Subdued festive season on the cards Importantly, the underlying economic environment remains unsupportive of a strong rebound in volume growth over the festive season. Higher prices, lacklustre employment creation, weak credit extension and low consumer confidence levels should keep a lid on volume growth during 216Q4. Taking into account both the latest survey results and the negative base effects following a solid 215 festive season, retail volume growth will likely measure below 1.5% during 216Q4. While higher prices might shield turnover growth, the lack of retailer pricing power in the face of weak domestic demand could limit any upside potential. Disconcertingly, retailers do not expect conditions to improve in any meaningful way in 217Q1, with net majorities of 15% and 4% respectively expecting general business conditions and sales volumes to deteriorate. The numerous headwinds facing the consumer - including a likely significant further tightening in fiscal policy in February - preclude any substantial recovery in the retail sector, and consumer spending in general, during the first half of 217. We now proceed to a more detailed breakdown of the latest survey results per retail category. Non-durable goods retailers hold up, semi-durables recover There is mounting evidence that consumers are shying away from purchasing more expensive durable and semi-durable goods and shifting expenditure to essentials such as food, with non-durable goods retailers recording better results than their peers in the durable and semi-durable sectors over recent quarters. In fact, semi-durable goods volume growth slowed to.4% y-o-y in 216Q3, while durable sales volumes contracted by.9% (see Table 1 below). In contrast, nondurable volume growth measured 2.1% y-o-y in 216Q3. Table 1: Year-on-year percentage change in retail sales volumes 215Q3 215Q4 215 216Q1 216Q2 216Q3 Total 3.3% 4.% 3.3% 3.3% 2.2%.9% Non-durable goods 1 3.2% 3.8% 2.9% 3.9% 2.4% 2.1% Durable goods 2 1.5% 1.8% 3.1% 1.2% 1.3% -.9% Semi-durable goods 3 4.6% 5.5% 4.2% 3.6% 2.3%.4% Source: Statistics South Africa, Retail Sales Statistics 1 Non-durable goods retailers include general dealers, retailers in specialised food, beverages and tobacco, and retailers in pharmaceutical and medical goods, cosmetics and toiletries 2 Durable goods retailers include retailers in household furniture, appliances and equipment, and retailers in hardware, paint and glass 3 Semi-durable goods retailers include retailers in textiles, clothing, footwear and leather goods 3
Subdued nondurable volume growth expected in 216Q4 While the latest survey results suggest that non-durable goods (e.g. food, beverages, groceries, pharmaceuticals and cosmetics) volume growth continued to outperform the other categories in 216Q4, the underlying trading environment deteriorated relative to Q3. Confidence among non-durable goods retailers dipped sharply (from 76% to 38%), while business conditions deteriorated markedly. Importantly, rising prices continue to weigh on volume growth, with inflation in the category accelerating from a recent low of 4.4% y- o-y in 215Q4 to 7.9% in 216Q3. Drought-fuelled increases in soft commodity prices (such as maize and wheat), coupled with significant exchange rate weakness, have fuelled food inflation in the category over the last 9 to 12 months. The latest survey results suggest that price pressures remain elevated, which could result in relatively subdued volume growth over the festive season. Disconcertingly, non-durable goods retailers expect conditions to deteriorate markedly going forward, with a net majority of 14% projecting lower sales volumes in 217Q1. High food price inflation (particularly for meat products), weak employment growth, subdued growth in government remuneration and significant tax increases will likely limit volume growth in coming months. Improved fortunes for semi-durable goods retailers Volume growth in the semi-durable category (e.g. clothing, footwear, sporting equipment, CDs and toys) measured a paltry.4% y-o-y in 216Q3, down from the 2.3% y-o-y recorded in 216Q2. Semi-durable volume growth has come under pressure on the back of tightening credit standards, subdued growth in consumers disposable income and rising prices due to a depreciated rand exchange rate. In addition, many clothing retailers noted that abnormally warm weather conditions this winter adversely affected their sales during the middle of the year. Figure 2: Semi-durable volume growth expected to recover y-o-y % change 15 12 9 6 3-3 -6 29Q1 21Q2 211Q3 212Q4 214Q1 215Q2 216Q3 net balance 95 8 65 5 35 2 5-1 - -4-55 -7-85 -1 BER retail sales volumes index (rhs) Stats SA retail sales growth Source: BER, Statistics South Africa 4
Encouragingly, the latest survey results suggest that conditions improved somewhat during 216Q4. The sales volumes index ticked up from a near-record low in 216Q3 (see Figure 2 on previous page), while better margins led to improved profitability levels. Given that there has been little improvement in the purchasing power of consumers during 216Q4 relative to 216Q3, the slight increase in sales volumes and profit margins in all likelihood reflect a better performance during the start of the summer season (relative to the extraordinarily poor sales volumes and major price discounting that prevailed during the abnormally warm/dry winter months.) Be that as it may, trading conditions remain tough. In all, only 37% of semidurable goods retailers reported being satisfied with prevailing business conditions, while a net 36% reported that trading conditions had deteriorated relative to 215Q4. Semi-durable goods retailers are cautiously optimistic that conditions will not deteriorate further in 217Q1. However, tighter credit conditions and low consumer confidence levels should continue to weigh on volume growth in the category over coming quarters, with a projected increase in personal income taxes likely to knock sales to higher income consumers further from March 217. Durable goods category remains in the doldrums In contrast, durable goods (e.g. hardware, furniture and household appliances) retailers continue to struggle. Retailers in household furniture, appliances and equipment in particular are feeling the pinch. Volumes in the category contracted by 3.1% y-o-y in 216Q2 and fell by a further 5.8% y-o-y in Q3, providing further evidence that consumers are shifting away from big-ticket items towards essentials. Additionally, volume growth for retailers in hardware, paint and glass slowed to just 2.3% y-o-y in 216Q3 from 4.2% y-o-y during the second quarter. The latest survey results clearly show that the durable goods retail trade is currently the worst performing consumer goods sector. In all, only 22% of durable goods retailers reported being satisfied with prevailing business conditions, while a net majority of 7% reported lower sales volumes relative to a year ago. Apart from a slowdown in real household income growth and heightened uncertainty about South Africa's economic prospects and future income growth, tighter credit standards (e.g. new stringent affordability checks) and the higher cost of credit continue to weigh on credit extension and, consequently, on volume growth in the durable goods category. Durable goods retailers are cautiously optimistic that conditions will improve in 217Q1. However, a meaningful acceleration in volume growth is not on the cards given the numerous headwinds facing the sector. 5
Subdued festive season on the cards In all, while the overall retail sales volumes index ticked up from very depressed levels in the first half of the year, the latest figure remains below long run average levels (see Figure 3 below). Retail sales volume growth could recover slightly following a weak performance in 216Q3, but a meaningful acceleration is not on the cards. Taking into account the latest survey results and high 215Q4 base, retail volume growth likely measured below 2% during 216Q4 (see Figure 3). However, non-durable goods retailers are the only retailers that are likely to record better sales volumes compared to the 215 festive season, with both semi-durable and especially durable goods retailers expected to post lower sales volumes compared to the same time last year. Rising prices should protect turnover growth to some extent, but weak domestic demand on the back of rising price sensitivity among consumers could limit any upside potential. Figure 3: Subdued festive season on the cards y-o-y % change 1 8 net balance 5 35 6 4 2-2 -4 BER retail sales volumes index (rhs) Stats SA retail sales growth -6 Average BER sales volumes index 29Q1 21Q2 211Q3 212Q4 214Q1 215Q2 216Q3 2 5-1 - -4-55 Source: BER, Statistics South Africa Wholesaler confidence steady despite lower profitability Wholesale volume growth ticks up According to Statistics South Africa, wholesale sales volume growth slowed to 2.1% y-o-y in 216Q3 after the robust 4% expansion recorded in Q2. However, results from the latest survey suggest that conditions improved somewhat during 216Q4. In all, 53% of wholesalers reported being satisfied with prevailing business conditions. While profitability in the sector came under renewed pressure during the quarter, higher volumes and an improvement in general trading conditions supported confidence. In all, the latest survey results suggest that volume growth likely accelerated somewhat during 216Q4 (see Figure 4 on the next page). 6
Figure 4: Pick-up in wholesale volume growth expected y-o-y % change 3 net balance 1 8 2 15 1 5-5 -1 6 4 2-2 -4-6 -15 26Q4 28Q1 29Q2 21Q3 211Q4 213Q1 214Q2 215Q3 216Q4-8 BER wholesale sales index (rhs) StatsSA wholesale sales growth Source: Statistics South Africa, BER Subdued selling price inflation weighs on profits However, the higher sales volumes came at the expense of overall profitability. While the latest survey points to a sustained moderation in purchasing price inflation, wholesalers were unable to take advantage of moderating costs and were forced to limit selling price increases in the face of weak demand. The lower selling price inflation boosted volume growth, but also resulted in a decline in overall profitability in the sector. Non-consumer goods category improves, consumer goods wholesalers struggle In contrast to the 216Q3 survey, results for the different subcategories were mixed, with non-consumer goods wholesalers outperforming their peers in the consumer goods category. This matches official statistics where nominal sales growth for non-consumer goods wholesalers (1% y-o-y) outpaced nominal sales growth in the consumer goods category (6.8% y-o-y) during 216Q3. Improved activity in nonconsumer goods category After increasing by 14 index points in 216Q3, business confidence among wholesalers in the non-consumer goods sector (e.g. machinery, building material, chemicals, petroleum products and office equipment) fell back by 6 points in 216Q4. In all, 51% of non-consumer goods wholesalers reported being satisfied with current business conditions. Despite the slight drop in confidence, the underlying data points to improved activity in the sector during 216Q4. The sales volumes index ticked up to a multi-year high, while the index measuring overall profitability also improved markedly. The improved performance was widespread, with wholesalers in both the machinery and equipment and hardware and building material categories recording better results. Machinery and equipment wholesalers appear to be 7
benefiting from increased activity in the agricultural (and to lesser extent mining and manufacturing) sector, while hardware and building material wholesalers are reaping the rewards of a marginal improvement in the building and construction sector, and the residential sector in particular. Business confidence among wholesalers in the consumer goods category (e.g. textiles, clothing, footwear, food, beverages, furniture and household appliances) remained relatively stable in 216Q4, despite a deterioration in underlying conditions. Food and beverages wholesalers in particular recorded disappointing results. In contrast, clothing and textiles wholesalers delivered a somewhat better performance compared to the very weak third quarter, mirroring the results for semi-durable goods retailers. New vehicle trader confidence remains subdued Declining sales weigh on new vehicle trader confidence After contracting by 6% y-o-y in 215, new passenger car sales have fallen by a further 12.5% y-o-y in the first nine months of 216. Unfortunately, the latest survey results do not inspire confidence in a turnaround in 216Q4, with a net majority of 56% of new vehicle traders indicating that volumes deteriorated during the quarter. In fact, new passenger car sales fell by 11.6% y-o-y in October/November, confirming that another large contraction is on the cards for 216Q4 (see Figure 5 below). Waning demand, rising costs and declining sales continue to weigh on confidence in the sector, with only 26% of new vehicle traders reporting that they are satisfied with current conditions. Figure 5: New vehicle sales remain in doldrums y-o-y % change 6 4 2-2 October/November -4 Q4 27Q2 28Q4 21Q2 211Q4 213Q2 214Q4 216Q2 BER new vehicle sales index (rhs) New vehicle sales volume growth 1 8 6 4 2-2 -4-6 -8-1 Source: dti, BER Looking ahead, new vehicle traders remain cautiously optimistic that conditions might improve somewhat in 217Q1. However, these expectations are unlikely to be met. Lower disposable income growth in the face of an increased tax 8
burden, rising new car prices, subdued credit growth and low consumer confidence should continue to weigh on new passenger car sales in early-217 and beyond. Higher volumes support used vehicle trader confidence As has been highlighted in previous versions of this publication, used vehicle traders continue to reap the benefits of a shift in spending toward cheaper, previously owned vehicles. The same is true in 216Q4. Used vehicle trader confidence ticked up during the quarter, with 68% of used vehicle traders indicating that they are satisfied with prevailing business conditions compared to 54% in 216Q3. Additionally, the solid performance in the spare parts and maintenance category suggests that consumers are shying away from purchasing new vehicles and focusing on maintaining and/or repairing existing cars, providing further evidence of the lengthening of the replacement cycle. Used vehicle traders are confident that conditions will remain favourable going forward, with a net majority of 8% predicting higher sales volumes in 217Q1. Concluding Remarks Similar to the 216Q3 survey results, the latest BER Retail Survey points to difficult trading conditions in the retail sector, despite an improvement in some subcategories. Sales volume growth turned out better than expected for both semidurable and non-durable retailers (albeit still low), but disappointed in the durable goods category. Conditions remain tough with retailers having to keep a lid on selling price increases in a bid to boost volume growth. Wholesale volume growth also improved, but lower selling price inflation and weak demand for consumer goods in particular weighed on profitability in the sector. Retail sales declined by.2% in the three months to September (quarter-onquarter), while wholesale volumes remained flat, suggesting that underlying consumer demand remains weak. While the latest survey results suggest that conditions improved somewhat during 216Q4, a meaningful acceleration in volume growth is not on the cards. In all, subdued growth in real disposable income and credit extension and low consumer confidence levels are expected to weigh on overall consumer spending over the festive season and into 217. 9
BER Retail Trade Survey data Retail trade TOTAL 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 44 26 43 34 Change in business conditions 2-44 -41-27 -41-15 Growth in volume of sales 2-23 -23-19 -1-4 Growth in volume of orders placed 2 - -29-22 14-6 Growth in number of people employed 2 5 1 14 8 8 Change in the rate of increase of average purchase prices: Realised 2 93 77 7 51 41 Change in the rate of increase of average selling prices: Realised 2 79 52 57 43 33 Overall profitability of the business 2-31 -38-5 -16 Rating of present stock in relation to expected demand 2 35 16 14 27 Numeric (official) data 4 Growth in volume of sales 5 3.3 2.2.9 Growth in sales turnover 6 8.4 8.4 7.7 Change in the rate of increase of average selling prices 7 5. 6. 6.7 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. 4 Percentage change compared to the same quarter a year ago and seasonally adjusted. Source of data: Statistics SA. 5 At constant 28 prices. 6 At current prices. 7 Change in implicit price deflator. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 1
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5 - -5 - -1 213 214 215 216 217-1 213 214 215 216 217 Profitability Rating of present stock 1 1 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 11
SEMI-DURABLES ** 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 3 6 12 37 Change in business conditions 2-85 -93-86 -36 Growth in volume of sales 2-71 -5-85 -13-3 Growth in volume of orders placed 2-83 -69-82 15 3 Growth in number of people employed 2 17-1 -6 33 26 Change in the rate of increase of average purchase prices: Realised 2 99 71 8 48 41 Change in the rate of increase of average selling prices Realised 2 54 19 45 48 35 Overall profitability of the business 2-79 -67-79 13 Rating of present stock in relation to expected demand 2 36 13 22 34 ** Clothing, footwear, textiles and other semi-durables. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 12
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 Profitability Rating of present stock 1 1 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 13
NON-DURABLES ** 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 41 34 76 38 Change in business conditions 2-71 -5 16-5 -45 Growth in volume of sales 2-35 5 23-14 Growth in volume of orders placed 2-45 6 7 22-34 Growth in number of people employed 2 15 44-23 -7 Change in the rate of increase of average purchase prices: Realised 2 9 96 74 66 49 Change in the rate of increase of average selling prices: Realised 2 88 64 61 5 44 Overall profitability of the business 2-38 -28-36 -4 Rating of present stock in relation to expected demand 2 44 17 6 29 ** Beverages, pharmaceuticals, toiletries, food and groceries. 1 See graphs on opposite page. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 14
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Profitability 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 15
DURABLES ** 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 54 33 26 22 Change in business conditions 2-4 -43-43 -42-8 Growth in volume of sales 2 7-39 -29-7 6 Growth in volume of orders placed 2 14-43 -18-2 6 Growth in number of people employed 2 6-8 -13-4 -17 Change in the rate of increase of average purchase prices: Realised 2 94 57 57 38 33 Change in the rate of increase of average selling prices: Realised 2 79 67 59 24 13 Overall profitability of the business 2-7 -26-48 -51 Rating of present stock in relation to expected demand 2 16 19 7 ** Furniture, household equipment, electronic goods, hardware and jewellery. *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 16
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Profitability 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 17
WESTERN CAPE 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 42 22 34 3 Change in business conditions 2-26 -6-31 -59-26 Growth in volume of sales 2 7-52 -28-1 6 Growth in volume of orders placed 2 4-54 -26 15 1 Growth in number of people employed 2 18-3 -1 18 17 Overall profitability of the business 2-1 -39-62 4 Rating of present stock in relation to expected demand 2 4 12 19 29 EASTERN CAPE 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 12 44 44 48 Change in business conditions 2 24-59 -43 37 18 Growth in volume of sales 2-26 -44-21 51-66 Growth in volume of orders placed 2 29-54 18 54-31 Growth in number of people employed 2-22 -38 39-43 Overall profitability of the business 2-35 -64-59 -67 Rating of present stock in relation to expected demand 2 64 7 38 16 *. 1 See graphs on opposite page. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 18
WESTERN CAPE EASTERN CAPE 1 Business confidence (downturn is shaded) 1 Business confidence (downturn is shaded) 8 8 6 6 4 4 2 2 1998 2 22 24 26 28 21 212 214 216 1998 2 22 24 26 28 21 212 214 216 1 Change in business conditions 1 Change in business conditions 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Growth in volume of sales 1 Growth in volume of sales 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 19
KWAZULU-NATAL 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 38 34 78 49 Change in business conditions 2-9 -9-11 -38-9 Growth in volume of sales 2-77 7 4 13-5 Growth in volume of orders placed 2-83 1-18 15-59 Growth in number of people employed 2 1 19 57-23 -6 Overall profitability of the business 2-36 -17-22 -67 Rating of present stock in relation to expected demand 2 49 31 14 44 GAUTENG 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 56 11 24 4 Change in business conditions 2-39 -5-28 -21-4 Growth in volume of sales 2-17 - -2-12 -4 Growth in volume of orders placed 2-31 -32-2 -12-8 Growth in number of people employed 2-3 18-3 -6-3 Overall profitability of the business 2-58 -55-57 -36 Rating of present stock in relation to expected demand 2 13 3 4-5 *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 2
KWAZULU-NATAL GAUTENG 1 Business confidence (downturn is shaded) 1 Business confidence (downturn is shaded) 8 8 6 6 4 4 2 2 1998 2 22 24 26 28 21 212 214 216 1998 2 22 24 26 28 21 212 214 216 1 Change in business conditions 1 Change in business conditions 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Growth in volume of sales 1 Growth in volume of sales 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 21
Wholesale trade TOTAL 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 5 47 56 53 Change in business conditions 2-34 -38-2 -14-3 Growth in volume of sales 2-7 -26-2 3-7 Growth in volume of orders placed 2-17 -3-11 -1-2 Growth in number of people employed 2-8 -5-12 -1 Change in the rate of increase of average purchase prices: Realised 2 96 83 46 28 Change in the rate of increase of average selling prices: Realised 2 62 58 27 23 8 Overall profitability of the business 2-6 -15-9 -32 Rating of present stock in relation to expected demand 2 37 28 4 1 Numeric (official) data 4 Growth in volume of sales 5 -.1 4. 2.1 Growth in sales turnover 6 8.5 1.3 8.6 Change in the rate of increase of average selling prices 7 8.7 6.1 6.3 *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. 4 Percentage change compared to the same quarter a year ago and seasonally adjusted. Source of data: Statistics SA. 5 At constant 2 prices. 6 At current prices. 7 Change in implicit price deflator. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 22
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 Profitability Rating of present stock 1 1 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 23
NON-CONSUMER GOODS ** 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 47 43 57 51 Change in business conditions 2-5 -42-2 17 Growth in volume of sales 2 13-22 -9 45 7 Growth in volume of orders placed 2-6 - -38 29 3 Growth in number of people employed 2-6 -3-18 -1 12 Change in the rate of increase of average purchase prices: Realised 2 95 83 59 16-1 Change in the rate of increase of average selling prices: Realised 2 58 56 34 27-9 Overall profitability of the business 2 5-21 -26-3 Rating of present stock in relation to expected demand 2 33 35 33-2 ** Machinery, construction & building material and chemical & petroleum products. *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 24
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Profitability 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217
CONSUMER GOODS ** 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 53 5 56 55 Change in business conditions 2-63 -34-2 -44-18 Growth in volume of sales 2-28 -28 4-27 -18 Growth in volume of orders placed 2-28 -33 13-26 -7 Growth in number of people employed 2-1 -8-7 -2-1 Change in the rate of increase of average purchase prices: Realised 2 96 83 35 37 44 Change in the rate of increase of average selling prices: Realised 2 66 6 2 19 2 Overall profitability of the business 2-18 -1 5-54 Rating of present stock in relation to expected demand 2 42 23 45 22 ** Textiles, clothing, footwear, food, beverages, tobacco, furniture, household requisites and pharmaceuticals. *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 26
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 Profitability Rating of present stock 1 1 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 27
MACHINERY & EQUIPMENT 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 52 4 69 65 Change in business conditions 2-5 -44-17 36 15 Growth in volume of sales 2 21-19 -9 34 17 Growth in volume of orders placed 2-9 -21-43 9 12 Growth in number of people employed 2-1 8-16 15 35 Change in the rate of increase of average purchase prices: Realised 2 99 87 63-5 8 Change in the rate of increase of average selling prices: Realised 2 61 64 45 1 Overall profitability of the business 2 24-3 -13-14 Rating of present stock in relation to expected demand 2 26 44 4-21 *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 28
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5 - -5 - -1 213 214 215 216 217-1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 Profitability Rating of present stock 1 1 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 29
CONSTRUCTION AND BUILDING MATERIAL 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 83 29 3 65 Change in business conditions 2 64-43 - 56-37 Growth in volume of sales 2 77-35 -1 52-41 Growth in volume of orders placed 2 77-43 -42 51-42 Growth in number of people employed 2 68 6-16 -5-2 Change in the rate of increase of average purchase prices: Realised 2 96 94 6 88 Change in the rate of increase of average selling prices: Realised 2 87-21 46 7 7 Overall profitability of the business 2 68-35 - 63 Rating of present stock in relation to expected demand 2 87 18 28-11 *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 1993 1995 1997 1999 21 23 27 29 211 213 215-5 - -1 213 214 215 216 217 3
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5 - -1 213 214 215 216 217-5 - -1 213 214 215 216 217 1 Profitability 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 31
TEXTILES, CLOTHING & FOOTWEAR 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 81 76 63 76 Change in business conditions 2-99 34 44-11 1 Growth in volume of sales 2 12 56 43 52-13 Growth in volume of orders placed 2 28 45 22 51 51 Growth in number of people employed 2-32 -2-17 -3-1 Change in the rate of increase of average purchase prices: Realised 2 78 98 17 83 88 Change in the rate of increase of average selling prices: Realised 2 65 66 6 64 63 Overall profitability of the business 2-38 3 62-81 Rating of present stock in relation to expected demand 2 77 43 48 13 *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 32
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Profitability 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 33
FOOD, BEVERAGES & TOBACCO 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Business confidence 3 5 6 51 53 Change in business conditions 2-57 -34-41 -53-24 Growth in volume of sales 2-3 -33 1-41 -34 Growth in volume of orders placed 2-32 -38 23-34 -24 Growth in number of people employed 2-3 -2 1 1-1 Change in the rate of increase of average purchase prices: Realised 2 1 74 41 37 3 Change in the rate of increase of average selling prices: Realised 2 71 61 21 17 19 Overall profitability of the business 2-19 -3-44 Rating of present stock in relation to expected demand 2 2 9 33 1 *. 1 See graphs. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 34
1 Growth in volume of sales 1 Growth in number of people employed 5 5 - - -5-5 - -1 213 214 215 216 217 - -1 213 214 215 216 217 1 Purchase prices: Realised 1 Selling prices: Realised 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Profitability 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 35
PROVINCIAL PERSPECTIVE 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Western Cape Business confidence 3 66 48 51 62 Change in business conditions 2-59 -55-43 -2-6 Growth in volume of sales 2-11 -6 9 18-11 Growth in volume of orders placed 2-13 -26-12 1-13 Growth in number of people employed 2 21 27-6 13 11 Overall profitability of the business 2-14 -8-1 -2 Rating of present stock in relation to expected demand 2 4 33 53 17 Eastern Cape Business confidence 3 88 94 47 66 Change in business conditions 2-56 81 41-33 -49 Growth in volume of sales 2-3 89 41-1 -49 Growth in volume of orders placed 2-5 78 41-1 Growth in number of people employed 2-5 -1-1 Overall profitability of the business 2 32 56 49-33 Rating of present stock in relation to expected demand 2 51 82 52 1 KwaZulu-Natal Business confidence 3 37 32 71 45 Change in business conditions 2-12 -67-26 -83 13 Growth in volume of sales 2 12-17 12-81 14 Growth in volume of orders placed 2 12-18 11-82 -35 Growth in number of people employed 2-6 -36 4-16 -11 Overall profitability of the business 2 35 13 11-95 Rating of present stock in relation to expected demand 2 44 27 15 18 Gauteng Business confidence 3 37 46 58 53 Change in business conditions 2-28 -32-16 -5 6 Growth in volume of sales 2-24 -49-18 6-1 Growth in volume of orders placed 2-43 -44-24 -2 Growth in number of people employed 2 - -18-19 -12-5 Overall profitability of the business 2-31 -32-24 -35 Rating of present stock in relation to expected demand 2 39 2 35 12 *. 1 See graphs on opposite page. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 36
BUSINESS CONFIDENCE WESTERN CAPE EASTERN CAPE 1 Business confidence (downturn is shaded) 1 Business confidence (downturn is shaded) 8 8 6 6 4 4 2 2 1998 2 22 24 26 28 21 212 214 216 1998 2 22 24 26 28 21 212 214 216 KWAZULU-NATAL GAUTENG 1 Business confidence (downturn is shaded) 1 Business confidence (downturn is shaded) 8 8 6 6 4 4 2 2 1998 2 22 24 26 28 21 212 214 216 1998 2 22 24 26 28 21 212 214 216 37
Motor trade NEW VEHICLES 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 New Vehicles: 24 37 26 Business confidence 3-77 -68-49 -61-27 Change in business conditions 2-72 -74-56 -56-27 Growth in units sold 2-79 -72-46 -6-36 Growth in units ordered 2 22 51 17 3 Change in present stocks in relation to expected demand 2 Numeric (official) data 4 Domestic sales only (no exports) Total sales by motor dealers -9.9-1.1-13.7 Passenger car sales -8.6-12.8-16. Commercial vehicle sales -12.3-4.8-8.8 *. 1 See graphs on opposite page. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. 4 Percentage change compared to the same quarter a year ago. Source of data: Department of Trade and Industry. Blank spaces indicate data not available or not asked for. 38
1 Business confidence (downturn is shaded) 1 Change in business conditions 8 5 6 4-2 -5-1993 1995 1997 1999 21 23 27 29 211 213 215-1 213 214 215 216 217 1 Growth in volume of sales 1 Growth in units ordered 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Rating of present stock 5 - -5 - -1 213 214 215 216 217 39
USED VEHICLES & SPARE PARTS 16Q1 16q2 16q3 16q4 17q1* Qualitative data (survey results) 1 Used Vehicles Business confidence 3 46 43 54 68 Change in business conditions 2 4-35 9 8 Growth in units sold 2 13-33 -1 12 9 Change in present stocks in relation to expected demand 2 - -11-35 Spare Parts Business confidence 3 59 6 64 62 Change in business conditions 2-1 3-1 3 Growth in units sold 2-3 5 5 4 5 Growth in units ordered 2-1 -7-7 -2-1 Change in present stocks in relation to expected demand 2 5 8 8 9 *. 1 See graphs on opposite page. 2 Net balance. 3 Percentage gross rating prevailing business conditions as satisfactory. Blank spaces indicate data not available or not asked for. 4
USED VEHICLES SPARE PARTS 1 Business confidence (downturn is shaded) 1 Business confidence (downturn is shaded) 8 8 6 6 4 4 2 2 1993 1995 1997 1999 21 23 27 29 211 213 215 1993 1995 1997 1999 21 23 27 29 211 213 215 1 Growth in volume of sales 1 Growth in volume of sales 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 1 Rating of present stock 1 Rating of present stock 5 5 - - -5-5 - - -1 213 214 215 216 217-1 213 214 215 216 217 41
Technical note Short-term planning is hampered as numeric (official) data is released with a time lag. Business survey results reveal what happened between the release of the last official figures and the current state of affairs. The results not only reveal beforehand the direction of sales, selling prices, employment etc. (for which official figures are published), but also provide unique information, such as business confidence, rating of business conditions and respondents expectations (or forecast) for the next quarter for which no official figures exist. It is now widely recognised that these subjective individual expectations play a key role in economic developments. Furthermore, the survey results of successive quarters provide a means of tracking cyclical movements, pinpointing trend changes and establishing forecasts. The survey results are obtained from questionnaires completed by senior executives in the trade, manufacturing and building sector during the last month of every quarter. The business survey questionnaire contains a small number of questions. These questions are qualitative in nature, e.g. Compared to the same quarter a year ago, are the volume of sales up, the same or down? No figures are requested. The sample of executives remains the same from one survey to the next. A panel is in effect established. The sample is divided according to main sectoral categories. Each firm gets a weighting in relation to turnover or size of workforce to provide for widely differing sizes. Participants have to complete a participant details form every few years to ensure that they are correctly classified and to provide for changes in turnover. The list of participants is also reviewed every few years to ensure an agreeable representation of the universe. Most of the responses are converted into net balances. For example, if the percentage of respondents rating sales volumes higher / the same / lower than a year ago is as follows; Higher Same Lower 7 1 2 then we can conclude that the majority of participants experienced higher sales. A net majority (i.e. the percentage of respondents rating sales higher less the percentage rating sales lower) of 5% is registered in the above example. A net majority of 1% for example would have indicated a decline in sales volumes compared to a year ago. A value of zero therefore indicates no change, between and 1 reflects a rise (or improvement) and between and 1 a decline (or deterioration) compared to the same quarter a year ago. The responses relating to business confidence are presented as percentages. For example, business confidence of 1 index points would indicate that 1% gross of the respondents rated prevailing business conditions as satisfactory. These data series vary between zero and 1. A value of zero reflects an extreme lack of confidence and 1 extreme confidence. Furthermore, respondents have to rate the present situation and not how it compares with that of the same quarter a year ago as in the case of the net balance questions. 42