It is not only load shedding that has a negative impact on the economy. Consumers also face a higher petrol price and municipal tariff increases.
South African consumers continue to try to make ends meet as the economy continues to be hammered by load shedding, municipal tariffs and fuel prices. However, two positive developments - higher car sales and a widening trade surplus - attributed to a growth in exports. Vehicle exports increased by 18% in June 2022 compared to last year, although the total number exported during the first half of the year decreased by 2.9% compared to 2021. New vehicles sales increased by 7.
Vehicle exports increased by 18% in June 2022 compared to last year, although the total number exported during the first half of the year decreased by 2.9% compared to 2021. New vehicles sales increased by 7.6% in June compared to 2021, largely due to sales of new passenger cars increasing by 20.6%, with the recovering car rental industry buying 1 in 10 cars sold. However, new light commercial vehicles, bakkies and minibus sales fell by 20.8%.
It goes without saying that all local news were overshadowed by the country’s worst load shedding on record last week, with consecutive days of stage 6 load shedding way beyond the magnitude of rolling blackouts implemented in the past, when stage 6 was introduced for only one day in 2019. This kind of load shedding also causes electricity substations to break down more frequently and also affects water reservoirs and traffic lights.
In addition, households will feel the effect of the municipal electricity tariff increase that came into effect on Friday, but even before this increase and the current load shedding, the second quarter FNB/BER Consumer Confidence Index already showed a marked slowdown in consumer spending. The June Absa PMI also suggests that after a stellar performance in the first quarter, the manufacturing sector is set to be a drag on Q2 GDP.
On the employment front, private sector employment rose by just 81,000 year-on-year and even declined on a quarterly basis. The BER says overall, the post-pandemic formal sector employment recovery remained incomplete with total formal employment in the first quarter still 200,000 jobs below the levels in the fourth quarter of 2019.Interest rates will follow
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