BER says confidence ticked up in the hospitality subsector ever so slightly, from an already elevated 62 in 2024Q1 to 64 in 2024Q2. Picture: MOTSHWARI MOFOKENG Independent Newspapers.
Overall business confidence in the Other Services sector rose markedly to 55 in the second quarter of 2024, the Bureau for Economic Research (BER) said yesterday.
Katrien Smuts, an economist at BER, said this meant that just over half of the respondents were satisfied with prevailing business conditions.
“The increase in confidence was statistically significant and consistent with improvements in all the underlying indicators,” Smuts said.
“Business volumes and conditions increased by significant margins and are now above long-term average levels.”
The BER said the increase in business confidence was said to be in step with increases in business volumes.
Like the overall confidence indicator, the increase in business volumes and business conditions was statistically significant and now being in above long-term average levels, while realised employment was also up.
Unlike previous quarters, when confidence in some subsectors increased and in others dwindled, the increase in business confidence for the overall Other Services sector was driven by increases in all the subsectors, the most striking of which was the increase in the real estate subsector.
The BER said that in the real estate subsector, confidence increased to a level close to its long-run average.
This result was somewhat confounding since the current high-interest rate environment was continuing, while election jitters were at their peak when the survey was conducted.
That said, the increase in confidence was met by statistically significant rises in business conditions and business volumes.
However, the smoothed version of business conditions and volumes was still well below the long-run average levels, suggesting that the subsector is recovering after a slump.
Meanwhile, confidence ticked up in the hospitality subsector ever so slightly, from an already elevated 62 in the first quarter to 64 in the second quarter.
This level remained above the long-term average, and it was encouraging to see this subsector maintaining its upbeat performance, considering that the country was heading into the off-season period.
The uptick in confidence was similarly met by increases in business confidence and business volumes, both of which were now at above-average levels.
In the business services subsector, confidence ticked up by five points to equal its long-term average level of 56. Despite facing many headwinds, the respondents in this subsector remained relatively upbeat.
The results in the transport and storage subsector were somewhat mixed. Confidence increased slightly, although business conditions and volumes remained roughly level. Operating conditions for logistics companies remained tough, but respondents were cautiously optimistic about the future.
Smuts said the overall results for the Other Services Survey in the second quarter were surprisingly upbeat, considering the remaining uncertainty that prevailed around many fundamental aspects of the South African economy.
“For one, there is increasing talk of fewer interest rate cuts by the SA Reserve Bank, which could hurt the recovery of the real estate subsector,” he said.
“We also expected an uncertain election prospect to cause many respondents to take a wait-and-see approach. While this might have been the case for a few individual respondents, it did not filter through to the aggregate result, with confidence improving convincingly across all subsectors in other services.”
BUSINESS REPORT