The problem with economic data is that they tell us what we already know. When the data showed that South Africa was in a recession, most households could have told Stats SA that for free.
Interviews with 1 000 working households by Old Mutual Savings and Investment Monitor (SIM) in July 2016 had already reflected a deteriorating household position. The annual study of the attitude to finances of working South Africans living in major metropolitan areas found last year that the level of satisfaction with their overall financial situation had dropped to 5.7/10 – the lowest recorded since the survey started in November 2010. Two-thirds of households admitted to feeling high levels of stress about their finances, mostly due to debt.
So, perhaps we can look at the 2017 survey for some signs of where the economy is heading. The good news is that households appear to be in a better position than they were a year ago.
According to SIM, the satisfaction with the current financial situation has recovered back to 2015 levels, but, at an average of six out of 10, it remains a poor rating.
It is also important to note that, according to SIM, lowincome households earning less than R6 000 per month are not feeling any better; in fact, they remain highly dissatisfied with their financial situation.
But for higher-income earners – those earning more than R6 000 per month – the survey found definite areas of improvement.
This is also supported by figures from the TransUnion Consumer Credit Index, which found that people are starting to pay off their debts and are reluctant to take on further credit. This despite the fact that household cash flow has not necessarily improved, suggesting that people are starting to change their consumption behaviour.
The Momentum Unisa Wealth Report released this week found that the real value of South African households’ net wealth increased slightly in the first quarter. While it remains lower than a year ago, and is at the same level as three years ago, the report found that the reason for the increase was that the take-up of credit not only slowed, but actually contracted in real terms. There was a strong pull back in the real value of outstanding unsecured, credit card and instalment sales debt, while real mortgages also shrank.
The SIM survey found, unsurprisingly, that debt levels and financial stress are closely linked, with 64% of those who describe their stress levels as “overwhelming” admitting to having too much debt and having trouble managing it.