Author: Mike Schussler Source: Economists.co.za
Is this just a very bad GDP number (In the 1st quarter) or is it a bad number as a result of holidays shifting from one month (April) to another (March). This is public Holidays as well as some school holidays mainly for the inland provinces
In 2008 first quarter growth came in at 2,5% (weaker than expected and at 1,5% at first) but improved to 4,7% in the 2nd quarter as the Easter Holidays had shifted to March in 2008 as well. March then had just one extra holiday as Good Friday and Human Rights day were rolled into one in 2008 just like this where only Good Friday fell into March. (Similar things happened in 2005 were growth was 4,7% in 1st quarter but 7,5% in 2nd quarter without School holidays shifting quite as much then)
Also remember that in 2013 the school holidays of the inland provinces shifted much earlier to the 20th of March while the 21st was given off to the coastal provinces as well. This extra school holiday was not always a given earlier.
In 2008 the school holidays were also made earlier and the growth rate when it was first announced was 1,5% and shocked everyone. So the second quarter showed a big improvement in 2008 while SA was actually heading into a recession and the improvement was a little false.
This year something similar is happening but perhaps in the opposite direction. March was very weak and the extra holiday and extra school holidays made the 1st quarter GDP data seem particularly weak while I will bet that April data will look very good indeed. March went from 21 working days to 19 from 2012 to 2013. Plus the inland provinces had 5 extra school holidays and the coastal provinces had 1 extra school holiday in March 2013 compared to March 2012.
2013 is similar to 2008 in another way too, in that big electricity users were also asked to cut back power usage and paid for that weakening in certain manufacturing sectors while we had the black outs during 2008 in both the first and second quarter. While the blackouts took place, growth improved “expectantly” in the 2nd quarter and everyone was surprised but the lack of power was not enough to stop the growth improving from one quarter to the next due to less public holidays in the 2nd quarter.
I don’t expect nearly 5% growth in the second quarter but 3% could just be on the table as the holidays shift will account for much of the growth improvement in the 2nd quarter.