Slow start to fes­tive spend­ing

But eco­nomic ac­tiv­ity may soon pick up a bit, Sacci pre­dicts

Weekend Argus (Saturday Edition) - - BUSINESS - KASHIEFA AJAM

THIS IS one of those lucky years when both Christ­mas and New Year fall on week­ends, so the South African Cham­ber of Com­merce and In­dus­try (Sacci) is pre­dict­ing things will pick up over the fes­tive sea­son af­ter a fairly slow start.

Sacci chief ex­ec­u­tive Naren Rau said South Africa would get the most pos­si­ble num­ber of work days be­tween Christ­mas and New Year this year, so the level of eco­nomic ac­tiv­ity in re­la­tion to time would not be a prob­lem.

But he warned that, be­cause this was a par­tic­u­larly de­mand­ing year and p ro d u c t iv i t y gen­er­ally suf­fers a bit over the fes­tive sea­son, a typ­i­cal lull in eco­nomic ac­tiv­ity was still ex­pected. This was es­pe­cially wor­ry­ing since the cham­ber was not see­ing the usual amount of spend­ing dur­ing the weeks lead­ing up to Christ­mas.

“Gen­er­ally there is a slow­down in re­tail ac­tiv­ity be­tween Christ­mas and New Year, with the bulk of the ac­tiv­ity be­ing in the lead-up to Christ­mas.

“Most con­cern­ing, though, is our trade in­dex has been im­prov­ing very grad­u­ally over the last two months. Typ­i­cally, trade in­creases by sub­stan­tial mar­gins in the four months lead­ing up to Christ­mas – to date this has not been the case.”

Rau said the cham­ber’s con­cern was that re­tail trade, which dom­i­nates eco­nomic ac­tiv­ity over the fes­tive sea­son, was likely to be damp­ened this year.

“This is not at­trib­ut­able to pro­duc­tiv­ity, but to gen­er­ally sup­pressed lev­els of eco­nomic ac­tiv­ity and cau­tion by house- holds, who still re­mem­ber the chal­lenges caused by the eco­nomic cri­sis.”

Mean­while, in the cham­ber’s an­nual busi­ness con­fi­dence sur­vey this week, Rau said busi­ness should ex­pect a bleak year ahead, de­spite a pick-up in con­fi­dence last month.

“You will find it has a very strong neg­a­tive vibe, which is alarm­ing to us.”

Rau said 39 per­cent of busi­nesses sur­veyed had a poor per­cep­tion of eco­nomic growth im­prov­ing mean­ing­fully next year.

Per­cep­tions of fu­ture in­vest­ment spend­ing and house­hold con­sump­tion spend­ing were also dis­mal, with re­spec­tively, 44 per­cent and 46 per­cent of busi­nesses sur­veyed­feel­ing pes­simistic.

He said smaller busi­nesses still faced red tape that pre­vented them from op­er­at­ing ef­fi­ciently.

The sur­vey’s neg­a­tive out­look de­stroyed any joy gained from the news that the cham­bers’s busi­ness con­fi­dence in­dex had risen by 1.1 points to 87 points last month from 85.9 points in Oc­to­ber.

Cham­ber econ­o­mist Richard Down­ing said the ef­fects of the con­tin­ued low­er­ing of the Re­serve Bank’s key in­ter­est rate and the New Growth Path on busi­ness’s view of its fu­ture could not be dis­counted.

“Busi­ness is fully cog­nisant of the sig­nif­i­cance of eco­nomic growth and job cre­ation in South Africa, but is of the view the fo­cus of ef­fort should be di­rected at en­abling the busi­ness en­vi­ron­ment.”

‘The cham­ber’s con­cern is that re­tail trade was likely to be damp­ened over the fes­tive sea­son this year’


CHRIST­MAS SHOP­PING: Eco­nomic ac­tiv­ity may be damp­ened af­ter a par­tic­u­larly de­mand­ing year.

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