Business confidence in the transport and real estate has dampened, due to disruption in activity as a result of the devastating floods in KwaZulu-Natal and rising interest rates, respectively.
The Bureau for Economic Research (BER) released its Other Services Survey yesterday, showing activity in the transport sector weakened considerably in the second quarter.
BER deputy director George Kershoff said a lack of international tour groups had continued to suppress passenger road transport, while floods had damaged freight infrastructure.
“The temporary closure of the Durban port and the ongoing outage at Toyota’s plant in KwaZulu-Natal due to flooding, as well as a drop-off in mining and manufacturing activity, hit freight transport,” Kershoff said.
“While road freight transport was above pre-pandemic levels, according to the actual data from Stats SA for the first quarter, road passenger transport was still only at 61 percent.”
Meanwhile, real estate activity drifted down in the second quarter after a very strong first quarter.
Kershoff said property sales turned out somewhat less robust compared to the first quarter. He said that according to real transfer duties, property sales were one of the few other services sub-sectors where activity levels were noticeably higher than before the pandemic.
“However, this out-performance is not guaranteed to last much longer in so far as it is mainly driven by pent-up demand and semigration,” he said.
“The lockdown postponed many sales for a year or longer. Indications of further interest rate increases could also slow property demand.”
Overall, sentiment in the other services sector rebounded to 52 points in the second quarter of 2022, after declining from 49 to 43 points in the first quarter.
This matches the long-term average and was the highest level since the fourth quarter of 2016.
The rise in the total stemmed mainly from the business services sector, where confidence jumped from 38 to 63 points as confidence improved in the hospitality sector.
Activity expanded strongly in the hospitality sector for the third quarter in a row, albeit at a slightly slower pace compared to the first quarter.
Kershoff said the very high year-on-year growth rates for activity were due to the low levels of a year ago when few people went out to eat or travelled due to Covid-19 fears and restrictions.
Despite the strong bounceback, the actual data from Stats SA for the first quarter showed that hotel room occupation and the real income of restaurants were still 35 percent below pre-pandemic levels.
Kershoff said this under-utilisation was due to relatively low numbers of international and business travellers.
“Beyond the first quarter, sharply rising menu prices and renewed pressure on local household budgets are also probably dampening the frequency of people’s visits to and spending at restaurants,” he said.
“Load shedding could also be a contributory factor in the reluctance to go out eating in the evening.”