Heading for a downturn?

[Dave A]

Business confidence in South Africa is at its lowest level in 10 years, according to the RMB/BER Business Confidence Index released on Wednesday.

The index declined in the third quarter, falling by three points to 23.

This was the index's lowest level in 10 years -- a reading of 15 was recorded in the second quarter of 1999, just before the start of the last cyclical economic upswing in September of that year.

RMB said the third-quarter decline in business confidence was the net outcome of different results for the individual sub-sectors comprising the overall index.
full story from M&G here

What is interesting is there's a subtle shift in the cause - driven more by decreased margins than adverse changes in volume.

[Dave A]

Retail sales declined in September, Statistics South Africa said on Wednesday.

A decrease of 5,1% was reflected for September 2009 when compared with September 2008, the Pretoria-based agency said.

In August, retail sales declined by a revised 6,5% year-on-year, Statistics SA noted.

September's figure came as a shock as most economists had predicted a 4,4% year-on-year decline.
full story from M&G here

[BBBEE_CompSpec]

Just a useless piece of info for you guys, the motor vehicles on a new cars showroom floor do not belong to the dealer principal but to the bank that is to finance the vehicle. So when you next visit a showroom and you see plenty of cars, don't believe the dealer principal has money. (S)He has been bullied into taking the cars as the financing bank controls the showroom floor space. The financing bank has the final say and not the dealer principal. The markup on the vehicles is low and the commissions earned by the dealer principal is even lower. Every new car dealer principal has a F & I Manager seconded to him/her to complete the sales.

[BBBEE_CompSpec]

I assist in the maintaining of BBBEE Scorecards. One of our major fights with government is that Dealer Principals are being penalized an extra 50% on their total turnover. The Financing Houses should be taking responsibility for their portions. If you know any Dealer Principal/Owners who have an issue with this they are to please contact me as I am building a dossier for the DA that must be represented to government for amendment.

[BBBEE_CompSpec]

When you state retail sales have dropped in September, go to StatSA and check the details. It is usually the profit on retail sales has dropped and not the total sales turnover. The banks never lose.

[Dave A]

Then surely the figure would be quoted as retail profits?

Vehicles and retail sales have always been good indicators of the financial health of the consumer. If we're trying to assess whether the economy is growing or shrinking, it's the volume that counts. The profit of retailers is not nearly as relevant as their volumes.

It would be unsurprising to find that retail profits are affected by changes in volume, though

[Dave A]

Some good news - CPI is back in the 3-6% range.

South Africa's targeted consumer inflation slowed in line with expectations to 5,9% year-on-year in October, returning to the 3% to 6% target band for the first time in more than two-and-a-half years, official data showed on Wednesday.

Statistics South Africa said annual headline consumer price index (CPI) slowed from 6,1% in September while it was unchanged on a monthly basis compared with 0,4% the previous month.

[sterne.law@gmail.com]

Some good news - CPI is back in the 3-6% range.

This will change very quickly if ESKOM gets its way. Even if the prediction of a 25% increase comes through, it will be tough to perform in this band width

[Dave A]

ESKOM, the forex current account, the exchange rate, price of oil in Rands, food prices, pay increments... No shortage of stuff to burst the bubble.

But at least we were able to claw it back this time around. When inflation starts running you wonder whether it's going to just accelerate away totally out of control.

[wynn]

OOPS!! now Dubai is putting pressure on the world markets????

[Marq]

I still do not believe this cpi number.

As a consumer, out there most days shopping for something or other, I see nothing but increased prices. Twolley for twolley (I buy more or less the same items and stuff on a regular basis) I reckon basic food and household stuff is up over 20% this year. My rates are through the roof at 500%, electricity...well you all know the story there, water - my bill is in excess of 1k every month now, last year was round about R300-R400. Communication costs from telkom, vodacom etc seem to be static. Medical care..wow can anybody afford this anymore, Clothing...mmm...maybe the same to cheaper on the basics. On the plus side petrol is probably about 10% overall down (15% compared to nov last year) But from Dec last year to what it is being increased to now it will be about 8% up year on year. Wages seem to be up about 8 - 10% average, yet no one has any bucks.

This is a 'consumer' price index - I am not sure what else a consumer would configure into the argument for an inflation number......go figure.

Unless you want to factor into the equation - Gill Marcus and the inflation targeting scenario with the need to impress with soothsayer economists, or the bum stats sa statististics that no one knows where the numbers come from, or a need to reduce worker demands and communist union activities, or how about the need to show we are no longer in a recession and produce some positive numbers out the hat for a great festive season BS.

[Dave A]

Interest on debt is down.
Housing prices/accomodation costs - down or thereabouts.

What's in this measured basket must be published somewhere.

[sterne.law@gmail.com]

The basket of goods used to measure CPI is a HUGE bone of contention. About 3/4 years ago, I had an Accounting lecturer who at the time had just resigned from his post as Financial something or other in a government position here in KZN. He was a contender for Mayor, so fairly high up. On chatting about CPI and teh like, he raised the point that the goods used to measure in no way are indicative of spending patterns of teh nation. A key point to show this, JEWELERY is in the calculation and as a fairly considerable percentage. Will be interesting to know the make up of this basket

[Dave A]

I suspect the answer lies in one of the documents listed on this page about CPI from Stats SA. I had a tough time trying to fgure out which one dealt with the current basket, though.