SA's fourth quarter formal business turnover brings total spending to R2.57 trillion. Photo: Nokuthula Mbatha/ African News Agency (ANA)

JOHANNESBURG – Statistics South Africa (StatsSA) yesterday said that increased activity in trade and manufacturing underpinned the 5.5 percent rise in the fourth quarter formal business turnover – bringing total spending to R2.57 trillion in the quarter.  

However, data from the StatsSA also showed the challenges facing the country's battered construction industry.

The Quarterly Financial Statistics (QFS) survey covers a sample of enterprises operating in the formal non-agricultural business sector of the South African economy, excluding financial intermediation, insurance, government and educational institutions.

The data showed that between the third and fourth quarters of 2018, turnover increased in six of the eight industries covered by the survey, with the largest percentage increase in turnover recorded in manufacturing, followed by real estate and other business services.

Despite an increase in turnover, the data showed that total net profit before tax amounted to R144.2 billion in the quarter, plunging by 17 percent from the R173.6bn recorded in the third quarter.

StatsSA in its QFS said that the trade industry, which includes stores and supermarkets, saw its turnover climb by 6.3 percent on the back of increased consumer spending over the festive period. 

"The production of beverages and motor vehicle parts contributed to higher turnover in the manufacturing industry,” it said.

Rising platinum prices helped the mining industry increase turnover by 4.9 percent in the last three months of last year, StatsSA said. 

The two industries that contracted in the fourth quarter were construction and electricity, gas and water supply. 

The embattled construction industry saw a 0.9 percent fall in turnover. 

When looked at on a yearly basis, turnover in the construction industry plummeted by 8.9 percent from December 2017 to construction companies that have been on their knees since the 2010 infrastructure projects fizzled out. 

Group Five, once an investor darling, last month filed for bankruptcy. Basil Read, Esor Construction and Liviero Group applied for business rescue last year.

The February Budget provided a glimmer of hope for the ailing sector. Finance Minister Tito Mboweni in his Budget speech said that the government was prioritising resources towards the president’s infrastructure fund and away from the wage bill.

The government’s plan includes accelerating R526bn worth of on-budget projects by bringing in the private sector and development finance institutions. 

In addition, the government would commit R100bn over the next decade towards infrastructure projects.

Roy Mnisi, the executive director of Master Builders, said that the government needed to intervene in the construction industry to prevent its further destruction.

“In the long-term, we will lose our capacity to develop infrastructure and will have to depend on foreign companies in the future. That is why we are appealing to the government for engagement,” Mnisi said.