- While wholesale trade sales are still subdued in South Africa, one sector has exploded.
- Wholesale sales of building and construction materials were more than 45% higher in January 2021 than in January 2020 – before the start of lockdown.
- Like other countries, SA has seen a spike in spending on home improvements, but government’s massive infrastructure projects could further fuel sales.
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This week, Statistics South Africa released new wholesale trade sales for January, which showed that the economy is still far from firing on all cylinders.
Measured in real terms (constant 2015 prices), wholesale trade sales were 7% lower in January 2021 compared with a year before. This was due in part to the alcohol sales ban – wholesale trade of food, beverages and tobacco fell by 21%.
But one sector saw impressive growth: construction and building materials.
At current prices, wholesale trade sales of these materials were more than 45% higher than January 2020 – before the start of lockdown.
Wholesale trade sales of construction and building materials reached R10.5 billion in January. In the three months from November to January, sales were 22% higher than a year before.
The Steel and Engineering Industries Federation of Southern Africa’s (SEIFSA) chief economist Chifipa Mhango says the increase in the sale of construction and building material was mainly driven by the steady easing of lockdown restrictions, which led to an increase in demand of building supplies such as steel, cement and bricks, among others.
Mhango says the spike in sales of building supplies coincided with a welcome increase in metals and engineering (M&E) production sales, which improved significantly from R58 billion in December 2020 to R63 billion in January 2021.
“As the economy opens up and more Covid-19 vaccines are rolled out, we anticipate further green shoots in the sale of construction building materials. The rolling out of key government infrastructure projects to the total value of R791.2 billion in public sector spending into the next three fiscal years is also good news to the M&E sector, as we expect demand for construction and building materials to improve further,” Mhango says.
Government has a list of almost 300 infrastructure projects that it urgently wants to get off the ground, including roads, affordable housing, water provision, and energy.
Approvals for more than 50 of these infrastructure projects have been fast-tracked.
Like other countries, South Africa has also seen a boom in small-scale building for home improvement and DIY projects.
Consumers shifted their spending to home upgrades because they were spending less on other things, such as holidays.
Retail sales of hardware, paint and glass products were up almost 30% in January compared to a year earlier.