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This page's sole purpose is to provide readers with interactive charts and graphics regarding South Africa's formal business sector. The page will be updated on a adhoc basis as more quarter's data is released by Statistics South Africa (Stats SA).
The graphics and information will largely be based on the Quarterly Financial Statistics as published by Stats SA. |
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21 April 2020: Impact of Covid-19 on businesses
We take a look at the results of a rapid response survey conducted by Statistics South Africa in which it assesses the impact of Cocid-19 on businesses. Looking at the numbers it looks like only around 13% of enterprises stated that they are running at full capacity during the pandemic. Below an article published by Statistics South Africa discussing the results of this rapid response survey
A rapid response survey, conducted by Stats SA during the lockdown, asked businesses how the current crisis is affecting their operations in the two-week period from 30 March to 13 April 2020. This is what they told us. A total of 707 businesses in the formal sector responded to the survey, outlining the pandemic’s impact on turnover, trading, workforce, imports and exports, purchases, prices, and business survival.
The complete report is available here for download, but the following are a few of the key results:
A rapid response survey, conducted by Stats SA during the lockdown, asked businesses how the current crisis is affecting their operations in the two-week period from 30 March to 13 April 2020. This is what they told us. A total of 707 businesses in the formal sector responded to the survey, outlining the pandemic’s impact on turnover, trading, workforce, imports and exports, purchases, prices, and business survival.
The complete report is available here for download, but the following are a few of the key results:
- Four in ten businesses feel that they cannot continue to operate: When asked about financial resources, 42,2% of respondents indicated that they are not confident that they have the financial resources to continue operating through the COVID-19 outbreak. When asked how long business can continue without turnover, 54,0% of respondents indicated that they can survive without turnover between one to three months.
- Almost half of responding businesses have temporarily closed their doors: The industries reporting the highest percentages of temporary closure or paused trading activity were construction, manufacturing, trade and mining.
- Half of the respondents expect that their workforce size would stay the same: Asked how their workforce size might change over the two weeks following the reference period, 50,4% of respondents expected no change, while 36,8% expected their workforce size to decline. Businesses indicated that they have implemented a range of measures to cope with the impact of the pandemic on their workforce, including decreasing working hours (28,3% of respondents) and laying off staff in the short term (19,6% of respondents). Only about one in four businesses indicated that they had not taken any measures yet.
- Five in six businesses have experienced a drop in turnover: Asked whether turnover was within its normal range in the period 30 March–13 April 2020, 85,4% of respondents surveyed reported turnover below the normal range. Respondents in the construction, real estate and other business services, and transport industries were the most affected by lower than expected turnover.
- Almost two-thirds of businesses feel that this will be worse than the 2008/09 recession: Many businesses (65,0%) anticipate that the impact of the COVID-19 pandemic will substantially be worse than the 2008/09 global financial crisis. Only 4,3% of respondents indicated that the impact will or could be the same.
Readers should keep the following in mind when interpreting the results from this survey: micro businesses (with an annual turnover below R2 million) were not included, answers to the survey questions reflect the perceptions of respondents, and the findings are based on limited responses.
The strength of the data is that it provides a quick snapshot and valuable economic insight – in close to real time – into the impact of the COVID-19 pandemic on South African businesses.
26 June 2019: Formal sector employment in South Africa for 1st quarter 2019
We take a look at the number of formal sector employees employed in South Africa for the 1st quarter of 2019 as published by Statistics South Africa and break it down per sector.
Total number of formal sector employees during the first quarter of 2019 was 10 173 208, up 21 157 from the 4th quarter of 2018 and 69 319 more people employed in the formal sector in quarter one of 2019 compared to quarter one of 2018.
- Mining and quarrying: 458 584
- Gold mining: 93 152
- Non gold mining: 365 432
- Manufacturing: 1 227 316
- Electricity, gas and water supply: 60 078
- Electricity, gas, steam and water supply: 46 591
- Collection, purification and distribution of water: 13 487
- Construction: 617 984
- Wholesale, retail and motor trade; hotels and restaurants: 2 258 158
- Wholesale trade: 639 536
- Retail trade: 958 094
- Motor trade: 367 349
- Hotels and restaurants: 293 179
- Transport, storage and communication:483 197
- Financial intermediation, insurance, real estate and business services: 2 356 925
- Community, social and personal services: 2 710 966
- National departments: 467 353
- Provincial departments: 1 048 246
- Extra budgetary institutions: 106 391
- Local government: 334 924
- Universities and technikons: 109 990
Total number of formal sector employees during the first quarter of 2019 was 10 173 208, up 21 157 from the 4th quarter of 2018 and 69 319 more people employed in the formal sector in quarter one of 2019 compared to quarter one of 2018.
26 March 2019: Formal sector employment as published by Statistics South Africa
In this update we take a look at a article published by Statistics South Africa regarding South Africa's formal sector employment numbers for the fourth quarter of 2018.
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The December 2018 QES survey showed that an estimated 10 151 000 people were employed in the formal non-agricultural sector of the South African economy, which is up by 87 000 from 10 064 000 in the previous quarter. The number of people working part-time increased by 37 000 to 1 065 000 in the fourth quarter of 2018. Similarly, the number of people working full-time increased by 50 000 to 9 086 000 in the same quarter.
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The December 2018 QES survey showed that an estimated 10 151 000 people were employed in the formal non-agricultural sector of the South African economy, which is up by 87 000 from 10 064 000 in the previous quarter. The number of people working part-time increased by 37 000 to 1 065 000 in the fourth quarter of 2018. Similarly, the number of people working full-time increased by 50 000 to 9 086 000 in the same quarter.
Business services industry accounted for the biggest share of the observed increase in employment, contributing 53 000 employees, followed by the trade industry with 49 000 employees, community services industry with 9 000 employees and transport industry with 5 000 employees. However, there were decreases in employment reported by construction industry with 18 000 employees, mining industry with 7 000 employees, manufacturing industry with 3 000 employees, and the electricity industry with 1 000 employees.
Employment increased by 158 000 or 1,6% year-on-year between December 2017 and December 2018, with 134 000 being full time jobs and 24 000 part time jobs. These increases were mainly in: business services (77 000 or 3,4%), trade (55 000 or 2,5%), community services (32 000 or 1,2%) , transport (7 000 or 1,5%) and manufacturing industry (5 000 or 0,4%). During the same period, annual decreases were recorded in construction (-9 000 or (1,4%), mining and quarrying (-8 000 or -1,8%) and electricity industry (-1 000 or -1,6%).
Total earnings paid to employees amounted to R725 billion in December 2018, up from R685 billion in September 2018, a quarterly increase of R40 billion or 5,8%. Bonuses and overtime paid contributed R35 billion while basic salaries contributed R5 billion to the net increase. Increases in gross earnings were led by trade industry with R11,0 billion, manufacturing industry with R8,2 billion, business services industry with R7,1 billion, community services industry with R5,5 billion, construction industry with R3,5 billion, transport industry with R2,6 billion, electricity industry with
R1,5 billion and mining industry with R544 million. Year-on-year, total gross earnings increased by R46 603 million or (6,9%).
Average monthly earnings paid to employees in the formal non-agricultural sector remained unchanged quarter to quarter, and this amounted to R21 190 in November 2018; however annually it increased by 4,9%.
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So the extent of South Africa's employment problem is made clear when looking at the employment numbers above. Just over 10 million people are employed in the formal sector in South Africa, we have 4.9 million personal income tax payers in South Africa, and worryingly we have 3 million youths (between the ages of 18-24) who are not in employment, education or training. We as South Africa need WAY more people to be employed to address the unemployment and ever increasing youth unemployment problem in South Africa.
Employment increased by 158 000 or 1,6% year-on-year between December 2017 and December 2018, with 134 000 being full time jobs and 24 000 part time jobs. These increases were mainly in: business services (77 000 or 3,4%), trade (55 000 or 2,5%), community services (32 000 or 1,2%) , transport (7 000 or 1,5%) and manufacturing industry (5 000 or 0,4%). During the same period, annual decreases were recorded in construction (-9 000 or (1,4%), mining and quarrying (-8 000 or -1,8%) and electricity industry (-1 000 or -1,6%).
Total earnings paid to employees amounted to R725 billion in December 2018, up from R685 billion in September 2018, a quarterly increase of R40 billion or 5,8%. Bonuses and overtime paid contributed R35 billion while basic salaries contributed R5 billion to the net increase. Increases in gross earnings were led by trade industry with R11,0 billion, manufacturing industry with R8,2 billion, business services industry with R7,1 billion, community services industry with R5,5 billion, construction industry with R3,5 billion, transport industry with R2,6 billion, electricity industry with
R1,5 billion and mining industry with R544 million. Year-on-year, total gross earnings increased by R46 603 million or (6,9%).
Average monthly earnings paid to employees in the formal non-agricultural sector remained unchanged quarter to quarter, and this amounted to R21 190 in November 2018; however annually it increased by 4,9%.
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So the extent of South Africa's employment problem is made clear when looking at the employment numbers above. Just over 10 million people are employed in the formal sector in South Africa, we have 4.9 million personal income tax payers in South Africa, and worryingly we have 3 million youths (between the ages of 18-24) who are not in employment, education or training. We as South Africa need WAY more people to be employed to address the unemployment and ever increasing youth unemployment problem in South Africa.
11 December 2018: Business profit jumps in financial year 2016/2017
We take a look below at an article published on Statistics South Africa (Stats SA's website) following the release of the latest Annual Financial Statistics (AFS) data. The original article can be found here.
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Some good news in trying times. After two consecutive years of decline, South African businesses recorded a 49% increase in net profit before tax in financial 2017, according to Stats SA’s latest Annual financial statistics (AFS) survey. The mining industry was the largest contributor to this rise. The success of a business generally depends on earning a profit. Higher profits provide a company with the ability to expand its business, employ additional staff, and invest in non-current assets (such as buildings and equipment). The South African formal business sector generated R690 billion in profit in financial 2017, R228 billion more than the R462 billon recorded in financial 2016. This increase follows a two-year slump (2015–2016) that saw business profit fall by R95 billion.
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Some good news in trying times. After two consecutive years of decline, South African businesses recorded a 49% increase in net profit before tax in financial 2017, according to Stats SA’s latest Annual financial statistics (AFS) survey. The mining industry was the largest contributor to this rise. The success of a business generally depends on earning a profit. Higher profits provide a company with the ability to expand its business, employ additional staff, and invest in non-current assets (such as buildings and equipment). The South African formal business sector generated R690 billion in profit in financial 2017, R228 billion more than the R462 billon recorded in financial 2016. This increase follows a two-year slump (2015–2016) that saw business profit fall by R95 billion.
With the exception of the electricity, gas and water supply industry, all the industries covered in the AFS report saw their profits rise in 2017. The mining industry contributed the most to the R228 billion rise in 2017, increasing its own profits by R80 billion. Manufacturing contributed R69 billion and business services R38 billion. Higher turnover, higher profits on sales of assets and lower losses on revaluation of assets were the main reasons given for the overall rise in profit in 2017.
A closer look at mining
Mining is an important player in the South African economy. The industry contributes 7% to gross domestic product (GDP) and employs around 450 000 people. In the 2015–2016 period, turnover in the mining industry grew by only R24 billion. Falling mineral prices and lower productivity (brought on by electricity shortages and industrial action) contributed to slower growth. The problem of sluggish turnover growth during this period was compounded by higher operating costs. If total income is considered (income includes turnover and other forms of income, such as interest and dividends) the mining industry spent more than it earned in 2015 and 2016. This is in contrast to the 2001–2014 period that saw the industry spending less than the amount of income generated.
A closer look at mining
Mining is an important player in the South African economy. The industry contributes 7% to gross domestic product (GDP) and employs around 450 000 people. In the 2015–2016 period, turnover in the mining industry grew by only R24 billion. Falling mineral prices and lower productivity (brought on by electricity shortages and industrial action) contributed to slower growth. The problem of sluggish turnover growth during this period was compounded by higher operating costs. If total income is considered (income includes turnover and other forms of income, such as interest and dividends) the mining industry spent more than it earned in 2015 and 2016. This is in contrast to the 2001–2014 period that saw the industry spending less than the amount of income generated.
Following 2015 and 2016, the mining industry experienced a sharp rise in income in 2017. This was largely driven by a R71 billion rise in turnover. Mining of metal ores, coal and lignite, gold, and uranium ore sub-groups contributed to the increase.
This rise in turnover was the main driver behind the rise in profit. Net profit before tax in the mining industry grew by R80 billion, from a loss of R36 billion in 2016 to a profit of R44 billion in 2017. There was also a slight drop in spending (by 0,8% or R5 billion) in 2017 compared with 2016. The largest decrease in expenditure was seen in losses on revaluation and disposal of assets. A further decrease was seen in the losses on foreign transactions resulting from changes in foreign exchange rates.
While the mining industry may have enjoyed higher profits in 2017, the losses experienced in previous years have eroded the amount of capital available to buy new assets. Mining was the only industry that reported a decrease in capital expenditure in 2017 (a fall of 27%). This is the third consecutive year of decline in capital expenditure in the mining industry, with annual decreases reported in 2016 (-9,6%) and 2015 (-0,4%)
With the recent announcement by Stats SA that South Africa has emerged from its second economic recession since 1994, all eyes will be on upcoming economic releases to see if there will be more nuggets of good news.
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Download the latest Annual financial statistics (AFS) release here.
1 Formal business includes private businesses and public corporations. The AFS survey measures the financial performance and position of each industry. The report sources data from the financial statements of enterprises (i.e. private businesses and public corporations) in all industries, with the exclusion of agriculture and hunting; government and educational institutions; and financial intermediation, insurance and business services not elsewhere classified. The AFS 2017 survey information was collected for the financial years of enterprises that ended on any date between 1 July 2016 and 30 June 2017.
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Download the latest Annual financial statistics (AFS) release here.
1 Formal business includes private businesses and public corporations. The AFS survey measures the financial performance and position of each industry. The report sources data from the financial statements of enterprises (i.e. private businesses and public corporations) in all industries, with the exclusion of agriculture and hunting; government and educational institutions; and financial intermediation, insurance and business services not elsewhere classified. The AFS 2017 survey information was collected for the financial years of enterprises that ended on any date between 1 July 2016 and 30 June 2017.
26 June 2018: Employment in the formal business sector for Quarter 1: 2018
The bar chart below takes a look at the formal sector employment for the various industries for quarter 1: 2018. During the first quarter of 2018, the formal business sector added 55 990 jobs. Hardly enough to address the near record high unemployment rate experienced in South Africa. And one needs to look at the sectors that added these jobs.
Growth in employment during the first quarter of 2018 is shown below (both the raw numbers and the percentage change over the quarter):
The problem is the business sector just doesn't have the confidence in the SA economy to invest and grow in South Africa. We showed this with our BER/RMB business confidence index which showed that for the last 11 years businesses in South Africa thought the business environment is less than ideal. Click here to see that update.
- Mining and quarrying: 6 163 (-1.35%)
- Manufacturing: 8 307 (+0.7%)
- Electricity, gas and water supply: (284 (-0.4%)
- Construction: 11 976 (+2%)
- Wholesale, retail and motor trade: -26 023 (-1.21%)
- Transport and communication: -2 939 (-0.63%)
- Finance, insurance, real estate etc: 3 231 (0.14%)
- Community, social and personal services: 67 885 (2.59%)
The problem is the business sector just doesn't have the confidence in the SA economy to invest and grow in South Africa. We showed this with our BER/RMB business confidence index which showed that for the last 11 years businesses in South Africa thought the business environment is less than ideal. Click here to see that update.
14 May 2018: Employment in the formal business sector per quarter of 2017 per industry
In today's update we take a look at the formal sector employment per quarter per industry) for the year of 2017.
The bar chart above shows the formal sector employment per industry in South Africa for 2017. As the bar chart shows, the single biggest employer in the South African economy is the community, social and personal services industry (and this is largely made up by Government, be it municipal, provincial and national government departments
At the end of the 1st quarter of 2017, formal sector employment was sitting at 9 765 296, while for the 4th quarter of 2017, employment was sitting at 9 778 254, which means that South Africa's formal business sector added just under 13 000 jobs during 2017. Hardly good news for the millions of unemployed South Africans.
- Mining and quarrying: 452 862
- Manufacturing: 1 172 060
- Electricity, gas and water supply: 63 625
- Construction: 601 097
- Wholesale, retail and motor trade; hotels and restaurants: 2 154 201
- Transport, storage and communication: 467 818
- Financial intermediation, insurance, real estate and business services: 2 240 144
- Community, social and personal services: 2 626 447
- Average total formal sector employment: 9 778 254
At the end of the 1st quarter of 2017, formal sector employment was sitting at 9 765 296, while for the 4th quarter of 2017, employment was sitting at 9 778 254, which means that South Africa's formal business sector added just under 13 000 jobs during 2017. Hardly good news for the millions of unemployed South Africans.
17 November 2017: Employment in the formal business sector (Q2:2017)
The graphic below shows the employment per industry for June 2016 and June 2017. From the graphic it is clear which industry is the biggest employer in South Africa.
The bar chart above shows that "Community Services" is the biggest employing industry in South Africa. That specific industry is largely made up by government employees. Government employees make up 27% (or 2.58million people) of all employed people in South Africa . And it is no surprise then that compensation of employees makes up the bulk of South Africa's government's spending. See our Fiscal Policy Page for more on government spending.
The second biggest employing industry in South Africa is the Business Services industry, with almost 2.2million people. This industry includes security guards, cleaners, maintenance and repair staff etc. The trade industry (wholesale, retail and motor trade) comes in as the 3rd biggest employing industry in South Africa with just over 2million people working in this industry.
Electricity industry is the smallest employing industry based on the bar chart above, but with ESKOM running a monopoly in the sector the bulk of those 60 thousand employees work for ESKOM, making it one of the single biggest employers in South Africa. Currently the police service is the biggest employer in South Africa.
The second biggest employing industry in South Africa is the Business Services industry, with almost 2.2million people. This industry includes security guards, cleaners, maintenance and repair staff etc. The trade industry (wholesale, retail and motor trade) comes in as the 3rd biggest employing industry in South Africa with just over 2million people working in this industry.
Electricity industry is the smallest employing industry based on the bar chart above, but with ESKOM running a monopoly in the sector the bulk of those 60 thousand employees work for ESKOM, making it one of the single biggest employers in South Africa. Currently the police service is the biggest employer in South Africa.
13 November 2017: Turnover per industry for Q2:2017
The image below shows the contribution of various industries to South Africa's formal business turnover for the second quarter of 2017 (April 2017 to June 2017). Note the graphic was obtained from Stats SA.
Based on the pie chart above trade (which includes wholesale, retail, motor trade and accommodation) makes up around 36% of total turnover generated by formal businesses in Q2:2017. The manufacturing industry is a distant 2nd place with 27% and business services (security, cleaning, maintenance etc.) and even more distant 3rd place with 12% of total turnover generated. In total formal businesses generated R2.3trillion in turnover during the 2nd quarter of 2017 in South Africa.
Stats SA had the following to say regarding the results of the QFS (Q2:2017):
But simply taking turnover on its own as a measure of commercial success doesn’t provide a complete account. As in all areas of life, costs are inevitable, eroding any turnover that is generated. The two largest expenditure items faced by South African businesses are purchases, taking up 61% of total spending, and employment costs (14%). Other items measured (including interest on debt, hiring of vehicles and machinery, royalties, and renting of buildings) contribute about 10%. The miscellaneous category, referred to as “other expenditure”, is responsible for the remaining amount.
But simply taking turnover on its own as a measure of commercial success doesn’t provide a complete account. As in all areas of life, costs are inevitable, eroding any turnover that is generated. The two largest expenditure items faced by South African businesses are purchases, taking up 61% of total spending, and employment costs (14%). Other items measured (including interest on debt, hiring of vehicles and machinery, royalties, and renting of buildings) contribute about 10%. The miscellaneous category, referred to as “other expenditure”, is responsible for the remaining amount.
After all this spending, including tax and adjustments for inventories, the R2,3 trillion in turnover generated by the South African business sector was whittled down to R256 billion. This is profit earned after tax. Simply knowing how much profit was generated doesn’t provide us with a full indication of business performance. Context is required, and this is achieved by using a handy accounting measure called the profit margin ratio. By comparing two or more financial values where a relationship exists, accounting measures allow the analyst to dig a little deeper into the financial data. The profit margin ratio is calculated by dividing the profit or loss after tax by total sales or turnover. Simply stated, the ratio indicates how much of each rand earned by the industry in turnover is translated into profit.
Overall, the South African business sector earned 11 cents of profit for every rand of turnover generated in the second quarter of 2017. As mentioned earlier, trade earned the bulk of total turnover. In terms of profit margin, the industry was ranked fifth in the second quarter of 2017, at 4 cents for every rand of turnover generated. Business services took the top spot as the industry with the highest profit margin ratio, followed by personal services, manufacturing and transport. Construction was in sixth place, with 2 cents of profit for every rand of turnover generated. The electricity, gas and water supply industry, as well as mining, experienced losses, however. For electricity gas and water, it was the third consecutive quarter in which the industry spent more than it earned. See more at StatsSA.
Overall, the South African business sector earned 11 cents of profit for every rand of turnover generated in the second quarter of 2017. As mentioned earlier, trade earned the bulk of total turnover. In terms of profit margin, the industry was ranked fifth in the second quarter of 2017, at 4 cents for every rand of turnover generated. Business services took the top spot as the industry with the highest profit margin ratio, followed by personal services, manufacturing and transport. Construction was in sixth place, with 2 cents of profit for every rand of turnover generated. The electricity, gas and water supply industry, as well as mining, experienced losses, however. For electricity gas and water, it was the third consecutive quarter in which the industry spent more than it earned. See more at StatsSA.
The interactive pie chart below breaks down the R2.3trillion in turnover according to business size. Just what percentage of the R2.3trillion is made up by Small, Medium and Large businesses? The pie chart below answers this question:
As the pie chart shows nearly 60% (or R1.4trillion) of turnover by formal businesses for Q2:2017 were generated by large businesses, with small businesses bringing in 31.3% (or R721billion) and medium sized businesses bringing in 9,3% (or R215billion). The structure of South Africa's economy and business environment is pretty odd, with a small number of large businesses which contributes a lot to turnover generated, while there is a vast number of small businesses, generating almost a 3rd of all turnover in the country. Leaving medium sized businesses in the lurch with them just generating around 10% of turnover.
The graphic below shows the employee costs as a percentage of total expenditure per business size. As the chart shows, the smaller the business size the higher the percentage of employee costs to total expenditure is. And this is one of the problem that hamstrings smaller businesses, and will be made even worse with the implementation of minimum wage levels in South Africa.