CONSUMER confidence in South Africa is at an all-time low, with faith in the strike-ridden Eastern Cape's economy declining the sharpest. The last time the consumer confidence index (CCI) in the Eastern Cape was this low was in 2008, at the height of the recession, FNB chief economist Sizwe Nxedlana says. He blamed the sharp deterioration in the CCI in the province on the strikes in the vehicle manufacturing and components industries.
"Overall the CCI in the East Cape declined from 12 index points in the previous quarter to only one index point this past quarter. Generally people in the province are quite positive but the strike activity, combined with the slowdown of income growth and the overall negative economic outlook in the country, has affected the consumer confidence quite dramatically this quarter," Nxedlana said.
The FNB/Bureau for Economic Research (BER) CCI, which was released yesterday, plunged to a decade low of -8 index points for the third quarter nationally, the lowest it has been since 2003.
Nxedlana said consumers were especially pessimistic about the outlook for the national economy and expect it to worsen in the next year. A slump in consumer confidence implies a slowdown in the willingness for people to spend or utilise credit. "Work stoppages do not only hamper production in the short run, they also have the potential to dent fixed investments and job creation prospects in the long run," he said.
The drop in consumer confidence was much larger for low-income consumers, earning less than R7000 a month, compared to the higher income groups because of "loss of income during industrial action, soaring fuel prices and high unemployment levels", Nxedlana said.
But in a positive move last night, it was announced the National Union of Metalworkers of SA (Numsa) and the Fuel Retailers' Association (FRA) had reached an agreement in wage talks in the automotive sector. "We are pleased to have come to a position of agreement with Numsa," FRA chief executive Reggie Sibiya, said.
"It has, however, not been signed, and it is still subject to Numsa taking it to its national executive council for ratification."
Sibiya said he could not disclose details of the agreement until Numsa had consulted with its leadership. Workers have been on strike for more than three weeks.
Economist Mike Schussler said it was no surprise the Eastern Cape's CCI was at an all-time low since the province had been "hammered a bit" with the three-week strike at vehicle manufacturers, directly followed by the strike in the component industry, which affected manufacturers.
"The impact has been bigger than usual on the Eastern Cape and this why people are not feeling secure in their jobs. The automotive sector contributes the most to the province's manufacturing sector, and it has a knock-on effect on related services and even domestic tourism," he said.
Uitenhage's Volkswagen Group of SA (VWSA), stopped vehicle production for a second time in a matter of weeks on Monday due to the component strike, which will hopefully now end soon with the agreement reached last night. Company spokesman Matt Gennrich added his voice to that of concerned vehicle manufacturers countrywide. He said the loss of income for VWSA employees would have a "ripple effect in the Nelson Mandela Bay metro, to be felt for some time".
In another dispute in the industry, the Motor Industry Staff Association (Misa) said yesterday talks to resolve a pay dispute had deadlocked. It said it had no choice but to declare a dispute.
Misa is an affiliate of the Federation of Unions of SA and represents about 32000 workers in the automotive sector. Most of its members work in clerical, sales or technical divisions, making them skilled workers. It is also the majority union in the sector. – Additional reporting by Sapa