Hospitality sector grows in confidence while transport plummets

The Bureau for Economic Research’s Other Services Index, which tracks business confidence in the hospitality, transport, business services, and real estate sectors, saw the sharpest decline in its history at the beginning of 2023.

This index is not included in the BER’s Business Confidence Index due to its lagging business cycle, meaning its indicators recover or deteriorate later than other sectors. 

This was the first decline in the index since the first pandemic lockdown in 2020, when the hospitality sector reflected a business confidence level of zero. 

While the sectors in this index are given less importance than those in the business confidence index, they contribute 22% of South Africa’s GDP. 

With a decline in confidence comes a decline in contribution to GDP. 

Hospitality is the only bright spot in a bleak first quarter

In contrast to 2020, the hospitality sector is full of confidence. Its sub-index increased to 75 points at the beginning of 2023 from 73 at the end of 2022.

The BER said this is due to the return of international tourists to South Africa and a partial resumption in business travel. 

Domestic travel is also above pre-pandemic levels, with South Africans increasingly eating out. 

However, hospitality was the only sector to show improved confidence at the beginning of 2023. 

Transport crashed to 14 points in the first quarter of 2023 from 94 points at the end of last year. The BER noted that the transport sector is unusually volatile compared to other sectors. 

The transport sub-index focuses on the freight transport industry, which declined sharply due to high fuel costs, increased competition, and port delays. 

The sector reported an increase in payload, indicating that companies are increasingly using road transport instead of relying on Transnet’s failing rail system. 

Business services include renting machinery and equipment, computer services, and accounting, among others. 

This sector declined because companies decreased spending on these services to fund their load-shedding mitigation measures.


Top JSE indices