Johannesburg - The number of civil summonses issued for debt decreased year on year by 5.9 percent in the first quarter, according to data released by Statistics SA yesterday.
Data reveals the main contributors to the decrease were goods sold, promissory notes and services.
This reflects the downward trend in the growth in household credit balances that has largely been driven by a slowdown in growth of unsecured credit balances.
The results of the monthly survey are used by the private and public sectors to measure economic performance and are also an important indicator of unpaid debt in South Africa.
The June 2014 Quarterly Bulletin of the Reserve Bank released on Wednesday says growth in real final consumption expenditure by households moderated for the eighth time in nine consecutive quarters.
Affected by higher consumer and producer inflation, slower income growth and an increase in interest rates in January, consumer spending slowed marginally further from an annualised rate of 2 percent in the fourth quarter of last year to 1.8 percent in the first quarter of 2014.
Retail sales data released by Stats SA on Wednesday came out at 1.8 percent year on year in April, higher than estimates of 1.6 percent, from 0.8 percent the previous month, reflecting a subdued consumer spending.
On a monthly basis, retail sales recorded no growth following two months of contractions. In the three months to April, retail sales rose by 1.6 percent compared to the same period last year.
The Nedbank Group economic unit said the data continued to point to a subdued trend in consumer spending.
Annabel Bishop, the chief economist at Investec, said: “Growth in private sector credit extended to households has declined to 4.6 percent year on year, from 10 percent year on year in 2012. This is indicative of the slowdown in economic growth, to likely below 1 percent in the first half of 2014.”
The latest available Consumer Credit Market Report for the quarter to December by the National Credit Regulator (NCR), released in April, shows the total value of credit granted rose from R117.21 billion to R118.66bn for the quarter to December last year, an increase of 1.24 percent compared to the previous quarter but it decreased by 1.6 percent a year before.
The number of credit applications increased by 525 000 from 10.22 million in September to 10.75 million in December, an increase of 5.14 percent for the quarter. The rejection rate was 57.3 percent.
The NCR says the rand value of unsecured credit granted increased to R21.61bn or 3.43 percent for the quarter to December. On a year-on-year basis, the rand value of unsecured credit agreements decreased by R7.46bn or 25.65 percent. The number of accounts for unsecured credit increased by 6.7 percent for the quarter to December.
The Reserve Bank’s Quarterly Bulletin says the pace of increase in household spending on durable goods lost further momentum in the first quarter, amid dwindling consumer confidence and a moderation in credit extension to households.
Growth in real outlays on durable goods slowed from an annualised rate of 6.9 percent in the fourth quarter of 2013 to 2.8 percent – the slowest rate of increase since 2009.
Real spending on transport goods and computer and related equipment decreased over the period, probably affected by markedly higher prices in response to the notable depreciation in the exchange rate of the rand over the past two years.
Spending on recreational goods continued to increase at a firm pace, while outlays on furniture and household appliances and on other durable goods advanced at a more sedate pace over the period.