Data shows that South African households are in good stead when it comes to income, showing real growth in after-tax pay, which is leading to higher consumption.<\/p>\n\n\n\n
Better yet, the trend is likely to continue into 2025 and even 2026, with lower inflation, lower rates and higher pay boosting household spending and the economy.<\/p>\n\n\n\n
This is according to real income (inflation-adjusted) data from the BankservAfrica take-home pay index and the latest Household Consumption Expenditure (HCE) data from Stats SA.<\/p>\n\n\n\n
Real income rose by 5.2% y\/y in October after climbing over the third quarter of the year. This has supported HCE rising by 0.5% quarter-on-quarter in Q3\u2019s reading of GDP.<\/p>\n\n\n\n
According to Investec chief economist Annabel Bishop, excluding the dramatic fall in the agriculture sector, South Africa’s GDP expanded by 0.4% quarter on quarter.<\/p>\n\n\n\n
This paints an overall much better picture of the South African economy. <\/p>\n\n\n\n
Experts in the agricultural sector, including the Bureau for Food and Agricultural Policy (BFAP) and the Agricultural Business Chamber of SA, have questioned the Stats SA data and called for a deeper investigation.<\/p>\n\n\n\n
Regardless, Bishop noted that the signs are positive for hosueholds.<\/p>\n\n\n\n
“With household consumption expenditure typically contributing well over two-thirds of GDP, this fuelled GDP growth (ex-agriculture), while imports rose by 1.1% qqsa ahead of the festive season, with the latter detracting from overall GDP,” Bishop said.<\/p>\n\n\n\n
October saw the average salary dip below R17,000 (in nominal terms), to R16 895, with salary earners seeing a slight moderation on the month.<\/p>\n\n\n\n
On the year, however, average incomes were up 9.2% for October and 10.2% y\/y in September<\/strong>, rising consistently since the second half of 2023.<\/p>\n\n\n\n Notably, the lift in purchasing power is expected to persist over 2025 and into 2026.<\/strong><\/p>\n\n\n\n Interest rates have fallen modestly in South Africa to date, and are expected to fall further next year, while economic growth is expected to strengthen to 1.7% y\/y, from likely 0.9% y\/y this year, aiding employment in 2025. <\/p>\n\n\n\n Next year HCE growth is expected at 2.2% y\/y.<\/p>\n\n\n\n Adding to the good news for households, Bishop noted that the Money Stress Tracker for 2024 pointed to households being 5% to 10% less stressed than in 2023, aided by substantially lower inflation, higher real incomes and interest rate cuts.<\/p>\n\n\n\n Bishop noted that the Stress Tracker did flag continued financial stress for households – particularly among those earning more than R20,000 a month, who “seem to have the most debt repayment pressure”. <\/p>\n\n\n\n “This is the backbone of the middle-class population in South Africa. Fewer are taking active steps to deal with their money stress,” the report said.<\/p>\n\n\n\n Despite this, the latest FNB\/BER Consumer Confidence Index (CCI) shows an upward trend in sentiment from this class, with the index for this grouping improving further from its five-year high of -6 in Q3 2024 to -4 in Q4 2024.<\/strong><\/p>\n\n\n\n \u201cA string of favourable developments has seen consumer confidence riding much higher since Q2 2024, including the formation of the GNU, the termination of load shedding, a substantial deceleration in inflation, two interest rate cuts and the implementation of the two-pot retirement system,\u201d said FNB Chief Economist Mamello Matikinca-Ngwenya.<\/p>\n\n\n\n
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