Households cut back on spending
3 September 2009
Household spending fell by 5.8% in the second quarter as South Africans cut back on purchases of durable good such as cars, furniture and appliances, while spending more on fuel as prices dropped at the pump, the Reserve Bank reported this week.
"The rate of decline in real final consumption expenditure by households accelerated from 4.8% in the first quarter of 2009 to 5.8% in the second quarter," the Bank said in its latest quarterly bulletin.
Less durable goods bought
The central bank said that though declines were registered in all spending components, it was more pronounced in household expenditure on durable goods.
It said that real expenditure on durable goods declined further, at an annualised 18.8% in the second quarter of the year. This was in comparison to the rate of decline of 15.2% that was recorded in the first quarter.
South Africans spent less on goods such as cars, medical equipment, furniture and household appliances.
"Vehicle sales continued to be constrained by low consumer confidence, and the fact that households were more averse to debt and lenders more averse to risk. Alongside a decline in outlays on residential buildings, expenditure on furniture and household appliances contracted further," the Bank said.
Spending on semi-durable goods contracted at an annualized rate of 9.7% in the second quarter compared to the 7.9% recorded in the first quarter. The decline mostly lay in outlays on car parts and accessories.
Increased fuel consumption
Spending on non-durable goods declined at a 3.4% pace as opposed to the 12.2% in the first quarter.
"Decreased expenditure on non-durable goods was noticeable in all the subcategories of non-durable goods, with the exception of petroleum products. On a year-on-year basis the price of fuel declined by more than 20% in the second quarter of 2009, giving impetus to households' increased expenditure on fuel."
Growth in the real final consumption expenditure by households on services moved from the annual growth rate of 6.5% in the first quarter to a 2.7% contraction in the second quarter of the year.
Real disposable income
At the same time, the Bank said that the real disposable income of households contracted for the fourth consecutive quarter. "Following negative growth of 4.5% in the first quarter of 2009, real household disposable income declined at an annualised rate of 5.7% in the second quarter."
The Bank attributed the contraction to layoffs in specific industries.
The ratio of household debt to disposable income inched marginally lower, from 76.8% in the first quarter to 76.3% in the second quarter.
Having increased at an annualised rate of 5.8% in the first quarter of 2009, growth in real final consumption expenditure by general government decelerated to a rate of 0.2% in the second quarter.
"The slower growth in real government expenditure reflected lower spending on the defence procurement programme and lower real spending on compensation of employees," the central bank said.
Source: BuaNews
