Pretoria‚ Dec 6 (I-Net Bridge) - Growth in real final consumption expenditure by households decelerated for the third quarter in succession‚ to an annualised 2.6% in Q3 from 3.1% in the quarter before‚ the South African Reserve Bank's December quarterly bulletin (QB) released on Thursday revealed.
Consumption expenditure is important for domestic growth‚ and a slowing in the growth of consumption expenditure by households does not bode well for economic growth as it accounts for some 60% of gross domestic product.
The moderation in spending was evident in all the categories of durable‚ semi-durable‚ and non-durable goods.
Spending on services‚ which accounts for some 25% of total household spending‚ slowed to a 1.1% growth in the third quarter after moderating to a growth rate of 1.5% in the second quarter.
The most concerning was the moderation in the pace of spending on non-durable goods‚ which moderated to 1.7% in the third quarter - its slowest rate of increase since the second quarter of 2010.
The Reserve Bank said the slower pace of increase in this category reflected subdued spending on food‚ beverages and tobacco‚ and household fuel and power‚ which could be attributed in part to persistent increases in the prices of these products alongside a decline in spending on petroleum products.
Growth in real disposable income of households moderated to 2.6% in the third quarter following an annualised increase of 3.5% the quarter before‚ reflecting‚ among others‚ modest employment gains‚ according to the bulletin.
The ratio of household debt to disposable income remained unchanged at 76% both in the second and third quarters.
Consistent with the lower interest rate environment‚ the ratio of debt-service cost to disposable income decreased to 6.5% in the third quarter compared with 6.9% the quarter before.
Real gross domestic expenditure decelerated to 3% in the third quarter from an annualised rate of 4.9% in the preceding quarter.
The bulletin reported that the moderation in the pace of increase resulted mainly from slower growth in real final consumption expenditure by households alongside a slower accumulation of inventory holdings‚ which more than offset an acceleration in final consumption expenditure by government and gross fixed capital formation.
Real final consumption expenditure by general government accelerated from an annualised rate of 3.7% in the second quarter to 8.4% in the third quarter‚ mainly due to the acquisition of the final batch of aircraft as part of government's armaments procurement programme.
Growth in real gross fixed capital formation accelerated from an annualised 7% in the second quarter to 7.2% in the third. The growth was primarily driven by capital spending by public corporations and general government.