CityPress - - Business -

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.

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