South African business confidence in the transport and hospitality sectors rose during the third quarter of 2022, a new Bureau for Economic Research (BER) report has indicated.
The BER report, released on Tuesday, showed that during the third quarter of 2022, business confidence in the other services sector remained static (at 53 compared to 52 previously) according to the latest RMB/BER business confidence index (BCI) survey.
“It continues to hover around the long-term average, indicating that confidence is neither low nor high. Nevertheless, services (domestic trade and other services) outshone industry (building and manufacturing) and within services, other services outperformed in the third quarter,” BER said.
The survey was conducted among 350 firms from 10 to 29 August 2022.
Hotels, restaurants, transport, real estate and business services make up the other services sector. They are denoted as “other” services to distinguish them from the retail, wholesale and motor trade sectors, which are also part of the services sector but included in the index.
“In terms of the four sub-sectors making up the total, activity in the hospitality sector continued to pose the highest year-on-year growth. Growth in activity in the important business services sub-sector, which contributes 45% to the total, and real estate came off the boil. Transport activity, in contrast, rebounded,” BER said.
“The hospitality sector continued to benefit from the removal of all COVID-19 restrictions. Although the number of guests/patrons continued to rise relative to the previous quarter, the year-on-year tempo of increase decelerated somewhat, in large part due to the already higher level of a year ago, from its earlier records in the second quarter. The fact that pre-lockdown levels have not been reached, the upcoming summer peak season, the gradual return of business travellers and the resumption of events bode well in the short term.”
However, high menu price increases and an adverse real income shock to South Africa’s main tourist source markets are likely to stifle the sustainability of the sector’s recovery commencing with the off-peak season in 2023.
Road freight payloads surpassed pre-lockdown levels in the fourth quarter of 2021.
“The BER’s other services survey indicates that activity in road freight transport bounced back after the KZN flood disrupted the second quarter. High fuel costs and excess supply suppressed freight hauliers’ profitability. Passenger transport will only recover more meaningfully with the return of international tour groups from the Far East (China in particular),” the BER said.
Real estate agents saw a spectacular upsurge in activity over the past year, due to the unwinding of the lockdown backlog. According to the BER’s third quarter survey, activity eased as the unwinding ran its course, interest rates started rising and flooding put the KZN market temporarily on hold.
“Fortunately, a revival in the demand for property management services, especially in the residential rental market, is coming to the rescue. Although the growth in activity in business services lost some momentum relative to the second quarter, it remained spectacular from a historical perspective,” the report noted.
