ECONOMY: Cautious Consumers Still Spending
Recent Western Cape Business News
Cash withdrawals continue to drop with the February 2011 Spark Cash Index revealing an average cash withdrawal decline of 0,63% compared to January 2011.
Marc Sternberg, MD of Cape Town-based Spark ATM Systems, says while consumers provided retailers with a bumper Christmas, they became more cautious in the New Year and this pattern has flowed through into February.
The Spark Cash index recorded a R404 average cash withdrawal in February 2011. While this is down from January’s amount of R407, it is an improvement of 2,06% on the R396 recorded in February last year.
Sternberg comments: ‘’Consumers are following a similar pattern to previous years, allowing prudence to take hold in the early part of the year and only increasing expenditure in time for Easter. However, the drop in February withdrawals is a lot less than we have seen in recent years, -1,83% in 2009 and -1,02% in 2010, and this could indicate a continued uptick in consumer confidence.’’
Retail numbers for last year support his view. Sales figures were up 5,2% in 2010 compared to 2009 and indicate that consumer spending is gaining momentum albeit from a low base.
Further, consumer confidence is likely to continue on an upward path throughout the year as South Africa’s economy recovers, interest rates remain low, and employment opportunities improve.
At the same time, the slow movement in South African residential property prices puts a damper on any potential exuberance. According to the latest FNB’s House Price Index growth slowed to a year-on-year 0,2% (a decline in real terms of 2,3%), down from a revised 1,3% rise in January.
“The Spark Cash Index draws upon a significant sample of ATM transactions and - particularly in the light of consumers’ general reluctance to access credit - the patterns of cash withdrawals provide a useful insight into consumer confidence,” Sternberg says.
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