Latest building and vehicle data points to a prolonged recession
The latest Namibian vehicle sales statistics show a contraction by 5.4% to 1 100 units in October 2017, while there was a slight increase in building plans approved by the City of Windhoek (101.1% compared to a 52.5% in September.)
However, the number of building plans approved within the Windhoek municipal area in October 2017 contracted by 12.5% year to date to 1 873 units, compared to a contraction of 23.2% year to date in the prior year.
“The decline is the value of building plans can also be ascribed to higher unemployment and slow income growth coupled with low consumer and business confidence. We do note that Government has allocated less money to capital expenditure and this will continue to drag on building initiatives,” Simonis Storms Securities (SSS) stated.
In monetary terms, the value of buildings completed continues to contract by 19.9% year-to-date to N$397 million in October 2017, compared to a growth rate of 0.3% year-to-date in the prior year.
Furthermore, on vehichle sales, SSS added; “the Government, whom we consider the main player (buyer) in this industry has committed itself to fiscal consolidation and this put severe pressure on motor vehicle dealerships.”
Cumulative vehicle sales continue to contract on a rolling 12-month basis, and year-to-date vehicle sales figures are still below 2012 levels.
Another research firm, IJG stated that this is a reflection of depressed business and consumer confidence, adding that tighter credit conditions have only exacerbated the above conditions. Private Sector Credit Extension numbers are at a record low of 5.4% as of end of September 2017.
“The current interest rate environment remains precarious as inflation is likely to pick up following the depreciation of the rand as well as due to higher US$ oil prices. Should a rate hiking cycle commence consumers will come under further pressure. Household debt to disposable incomes have been rising making consumers more susceptible to interest rate hikes,” IJG Research forecasted.
Furthermore, a total of 452 new passenger vehicles were sold during October, up 2.0% month-on-month but down 2.6% year-on-year. Year-to-date passenger vehicle sales rose to 4,873, down 18.1% compared to the number sold by October last year.
CAPTION: Aggregated Suggested Retail Price (source: SSS)