Economic Performance Indicators for Cape Town 2021 QUARTER 1 (January–March) WWW.INVESTCAPETOWN.COM EPIC 2021: Q1 1 ACKNOWLEDGEMENTS ACKNOWLEDGEMENTS The EPIC quarterly publication is a collaboration between the Enterprise and Investment, and Policy and Strategy departments of the City of Cape Town. The EPIC publication presents and analyses economic (and related) trends in Cape Town on a quarterly basis. This edition focuses on the first quarter of 2021, covering the period 1 January to 31 March 2021. ECONOMIC CONTENT AUTHORED BY THE ECONOMIC ANALYSIS BRANCH, POLICY AND STRATEGY DEPARTMENT Manager: Economic Analysis: Paul Court Project manager and author: Dilshaad Gallie Additional authors: Monique Petersen Yoliswa Tiwe Jodie Posen Alfred Moyo MARKETING, DESIGN AND DISTRIBUTION BY THE INVEST CAPE TOWN TEAM, ENTERPRISE AND INVESTMENT DEPARTMENT Manager: Place Marketing: Rory Viljoen Project manager: Tarryn Voigt-Mallum Success stories: Caryn Jeftha Clayton Barnes Email: [email protected] [email protected] Online access: www.capetown.gov.za/EPIC ADDITIONAL SOURCES OF INFORMATION City of Cape Town Planning and Building Development Management: Lizanne Ryneveldt Marius Crous City of Cape Town Electricity Generation and Distribution: Cornie Malan 2 EPIC 2021: Q1 FOREWORD It has been a year since Covid-19 reached Cape Town At a provincial level, the Western Cape economy and South Africa, and the economic effects of the recorded pleasing growth of 4,0% quarter-on- pandemic and the resulting lockdown are still being quarter, mirroring the national trend and sustaining felt, particularly by the most vulnerable amongst us. its economic recovery following the nationwide lockdown in the second quarter of 2020. On the positive side, it is heartening to note that the various policies implemented by the City of However, Cape Town’s trade figures declined Cape Town have helped the metro’s economy on a quarter-on-quarter basis, both for exports and workforce to largely weather the Covid-19 and imports, and also recorded a slight year-on- storm. This was evident from the findings of year decline in building plan submissions. The the Quarterly Labour Force Survey for January good news, however, is that building completions to March 2021, which showed that Cape Town recorded year-on-year increases in both value maintained the lowest unemployment rate – on the and the number of projects, by 34,4% and expanded definition – of all metros, at 29,6%. In 91,3% respectively. fact, employment in the City’s formal and informal sectors increased by 20 000 (from 1,364 million to 1,384 million), quarter-on-quarter, at a time when the national economy shed jobs. At a provincial level, The main contributor to employment growth during the Western Cape the period was the finance sector, which added economy recorded 37 124 jobs, followed by transport and communication with 6 975, and electricity and water with 4 354 jobs pleasing growth of respectively. On a year-on-year basis, however, this 4,0% quarter-on- figure has decreased by 110 698 individuals. quarter, mirroring In light of this tenuous employment situation, the City prioritised its various City-funded training and the national trend job placement programmes offered by a number of our Special Business Partners (SBPs). In January, as and sustaining its part of the Cape Skills and Employment Accelerator economic recovery Project, the Craft and Design Institute started the first round of training of youths and women. following the Training of Business Process Outsourcing operators nationwide lockdown also got underway as part of the project. in the second quarter Cape Town’s call centres are a good example of how enabling an industry can effect stellar growth, even of 2020. in the midst of the pandemic. Between July 2018 and March 2021, the City allocated R28,5 million towards skills development and training via its SBP, It is also somewhat concerning that the tourism and CapeBPO. Today, the sector employs more than hospitality sectors have been particularly hard hit 60 000 people in Cape Town, across the domestic by the lockdowns, as demonstrated by Cape Town’s and foreign market. And the City now accounts for top five tourist attractions that recorded a decline more than half of the international call centre sector in visitor numbers on both a quarter-on-quarter and operations based in South Africa. year-on-year level, at an average of -14,8% and -72,3% respectively. In addition, air travel And training has also been going full steam ahead continued its downturn, with Cape Town in the all-important green economy sector, with the International Airport recording a drop of 8,4% South African Renewable Energy Business Incubator compared to the previous quarter. (Sarebi), based in Atlantis, starting its Business Savvy Workshop Series to train entrepreneurs to Thankfully, by March we did see increased flights to develop better, more sustainable, business models. Cape Town from airlines such as KLM, and Turkish 3 FOREWORD and Qatar Airlines, which resulted in steadily rising passenger numbers thereafter. The City is committed to collaborating with all tourism stakeholders to drive the vital tourism recovery going forward. Our 10-point tourism strategy, launched in December 2020, embraces international best practice and includes campaigns to stimulate supply and demand for specific key source markets, in order to drive the various stages of recovery and readiness. We also recognise that small businesses have an absolutely vital role to play in the sustainable recovery of the Cape Town economy. As such, my team has rolled out several new platforms through which to support SMMEs in the city, including the new Mobile Business Hub, which is literally taking professional support on the road to answer questions from entrepreneurs and small business owners, and to establish ways in which the City can support them so as to maximise their chances of success. Alderman James Vos Mayoral Committee Member for Economic Opportunities and Asset Management 4 EPIC 2021: Q1 CONTENTS ACKNOWLEDGEMENTS 02 FOREWORD 03 INTRODUCTION 07 KEY FINDINGS FOR THE FIRST QUARTER OF 2021 08 01. SUCCESS STORIES 09 02. OVERVIEW 15 03. ECONOMIC GROWTH 21 South Africa’s quarter-on-quarter economic performance 23 A global comparison of economic performance in the first quarter 24 Western Cape and Cape Town economic performance 24 04. INFLATION 27 Inflation overview 29 Geographical inflation 30 Western Cape food inflation 31 05. LABOUR MARKET 33 Cape Town’s labour market performance 35 Employment comparison of metros 36 Unemployment in Cape Town 37 Sector employment trends for Cape Town 38 06. INFRASTRUCTURE AND TRADE 39 Container traffic 41 Cape Town trade 44 Airport statistics 47 Commercial electricity usage 48 07. TOURISM 49 08. ADDITIONAL INDICATORS 53 Building developments 55 New vehicle sales 58 5 CONTENTS REFERENCE LIST 59 ABBREVIATIONS 61 LIST OF TABLES Table 1: Cape Town labour market indicators 35 Table 2: Unemployment rate comparison of metros, 2021 Q1 versus 2020 Q4 and 2019 Q1 37 Table 3: Comparison of total containers handled (in TEUs) 41 Table 4: Cape Town’s top 10 exports, 2021 Q1 46 Table 5: Tourist accommodation indicators, 2021 Q1 51 LIST OF FIGURES Figure 1: Real GGP growth for the Western Cape, 2010 Q1 to 2021 Q1 23 Figure 2: Sectoral real GDP-R growth rates in the Western Cape and South Africa, 2021 Q1 25 Figure 3: CPI and PPI trends for South Africa, January 2016 to March 2021 29 Figure 4: CPI inflation rate at a provincial level, January to March 2021 30 Figure 5: Average consumer price inflation for the Western Cape and South Africa, 2021 Q1 31 Figure 6: Western Cape food price inflation, 2019 Q1 to 2021 Q1 32 Figure 7: Employment comparison with other metros by major sector, 2020 Q4 versus 2021 Q1 36 Figure 8: Quarterly and annual change in employment per sector for Cape Town, 2021 Q1 38 Figure 9: Total containers handled (nationally), 2016 Q1 to 2021 Q1 41 Figure 10: Annual change in TEUs handled at the Port of Cape Town, 2016 Q1 to 2021 Q1 42 Figure 11: Cape Town’s trade balance, 2017 Q1 to 2021 Q1 44 Figure 12: Total (monthly) passenger movements at South Africa’s major airports, 2016 Q1 to 2021 Q1 47 Figure 13: Cape Town’s commercial electricity usage, January 2019 to March 2021 48 Figure 14: Total (monthly) visits to the top five tourist destinations of Cape Town, 2016 Q1 to 2021 Q1 52 Figure 15: Building plans submitted to the City of Cape Town, 2011 Q1 to 2021 Q1 55 6 EPIC 2021: Q1 INTRODUCTION This is the 32nd edition of the EPIC publication, lower than in 2019. While other industries, as has which presents and analyses economic (and related) been noted, saw growth in the first quarter of 2021, trends in Cape Town on a quarterly basis. the imposition of advanced lockdown measures (especially the closure of beaches) towards the Following the unprecedented shocks endured end of December dampened travel and tourism, by the economy last year, the first quarter of resulting in a further quarter-on-quarter decline in 2021 kicked off the new year on a positive note, passenger numbers in the first quarter of 2021. with GDP growth for the South African economy significantly exceeding expectations for the period. The latest accommodation statistics from Cape At a provincial level, the Western Cape economy Town Tourism reflect an occupancy rate of just grew by 4,0% quarter-on-quarter, driven by strong 25,8% for City accommodation establishments in contributions from the finance and trade sectors. January 2021. This compares very poorly with the Vehicle sales, which is just one aspect of the trade 71,8% recorded in January 2020.