Consumers felt more vulnerable about their income and savings in the second quarter of the year, according to the latest consumer financial vulnerability index released on Thursday.
“When compared to the first quarter, consumers felt more financially vulnerable in the second quarter of 2011 in terms of their income and savings, but yet felt less vulnerable regarding their spending and debt servicing abilities,” the Bureau of Market Research (BMR) of the University of South Africa said in a statement.
The quarterly index is produced by the BMR for MBD Credit Solutions in association with FinMark Trust.
Year-on-year, the index remained fairly flat, but the results worsened in the first two quarters of this year.
“This increase is unfortunate, but to be expected when one considers the sharp slowdown in the country’s economic growth from 4.5% in the first quarter to 1.3% in the second quarter,” said Prof Bernadene de Clercq, of the BMR.
Income vulnerability increased as consumers started feeling the effects of unemployment and the impact of salaries and wages not growing as fast as in previous years.
Unemployment rose by 158 000 people between the first and second quarter of 2011, according to Statistics SA.
Annual salaries grew 9.4% between the second quarter of 2010 and the second quarter this year, compared to 14.5% in the same period of 2009 to 2010.
Savings vulnerability increased as consumers saved less in the second quarter, according to SA Reserve Bank data.
“Households’ net consumption expenditure exceeded disposable income in Q2 2011, indicating that consumers are still dissaving,” the BMR said.
This meant people spent more and saved less.
“Spending more means less savings and thus the increase in levels of savings vulnerability,” De Clercq said.
The debt situation improved a little in the second quarter. However, consumers were still experiencing high levels of debt vulnerability. The percentage of consumers with impaired records increased from 46.4% in the first quarter to 46.7% in the second.
“This is to some degree countered by the cost of debt remaining at all time lows.”
The index is based on a consumer survey of 3 229 consumers and 783 interviews with key informants. — Sapa