Confidence in SA’s “other services” sector declined by five points to 52 in the first quarter of this year, despite a notable uptick in business activity, according to the latest Bureau for Economic Research (BER) survey.
The other services survey includes hotels and restaurants, transport and storage, real estate and business services. These industries collectively contribute to the service-driven segment of the economy, affecting consumer and business activity.
Despite the decline, the confidence index remains aligned with its long-term average, indicating a balanced outlook.
“A slight majority of respondents remain satisfied with business conditions,” Katrien Smuts, BER economist, explained. She noted, however, the underlying trends vary widely across subsectors.
The transport and storage subsector recorded a sharp drop in confidence, plunging from 49 in the fourth quarter to 34 in the first quarter of this year.
“This comes as no surprise, given that SA has been grappling with an ongoing logistics crisis, which continues to weigh heavily on activity in this industry,” Smuts noted.
Port congestion, rail inefficiencies and supply chain disruptions remain key challenges.
On the opposite end of the spectrum, hotels and restaurants showed remarkable resilience, with confidence jumping to 67 in the first quarter, up from 46.
“The peak tourist season, which extends through January and February, has provided a significant boost, further supported by increased activity related to SA’s G20 presidency,” said Smuts.
The Western Cape, a major tourism hub, has been particularly optimistic about prevailing business conditions.
The real estate subsector saw confidence decline to 51, down from 69 in the previous quarter, “largely as expected”.
“While confidence declined this quarter, it has now returned to more typical levels following last quarter’s surge in optimism,” Smuts said.
However, business volumes increased, fuelled by lower interest rates and higher demand for office space.
Confidence in business services declined to 53 from 64. However, hiring activity showed an encouraging uptick, indicating potential long-term optimism in the sector. “A particularly encouraging development was the notable increase in realised employment. Given that labour constraints are often a major hurdle for businesses, this uptick is a positive sign,” Smuts highlighted.
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