Slow start to festive spending
But economic activity may soon pick up a bit, Sacci predicts
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.