Johannesburg - The latest BankservAfrica disposable salary index showed yesterday that South Africa’s disposable incomes posted their first double-digit increase in 15 months and that the number of people taking home more than R10 000 a month has increased significantly.
The annual increase in average disposable salaries was 11 percent last month, the first double-digit increase since April last year and the biggest since September 2010. The index showed that nominal disposable salaries averaged R10 924 a month in July. The real increase in disposable salaries was 4.7 percent, the highest in almost two years.
The median disposable salary also increased to over R8 000 a month for the first time.
The overall total salary bill over the past three months increased by 12.2 percent year on year even though there was a slight decrease in the number of employees paid.
Mike Schüssler, the chief economist at economists.co.za, said the spike in consumers’ disposable income should help third-quarter growth as household consumption expenditure constituted about 60 percent of gross domestic product (GDP).
“The economy may benefit for a short period from this temporary spike. We expect that there will be another big increase in consumer spending in the next month or so, which may actually assist third-quarter growth,” he said.
This month retailers Massmart, Truworths and Edcon reported dull results for the first half of this year and Statistics SA’s retail sales data for June indicated the slowest growth rate in nine months.
The Reserve Bank quarterly bulletin released in June showed that growth in households’ real disposable income and the increase in their consumption expenditure moderated in the first quarter, while spending on durable goods continued to lose momentum.
In 2012, growth in household consumption expenditure slowed down from 4 percent in the beginning of the year to only 2.4 percent by year end.
“I’m not sure we will see the sort of increases we had at the beginning of 2012 this year, but July or August sales should be better than expected. We’ve already seen car sales increase by 7 percent in July and that beat expectations,” Schüssler said.
He estimated retail sales rose between 4 percent and 5 percent, but cautioned that this would be a once-off event or happen for two months at most.
Schüssler said this was because the growth in July disposable income was partly a timing issue. “It is important to keep in mind that salary increases were paid to public service members very late in 2012. This resulted in the fact that the current numbers actually reflect two years’ worth of increases for them, artificially increasing growth.”
He said a more realistic picture of the state of South Africa’s disposable salaries would be seen when the September data came out.
Brad Gillis, the chief executive of regulated products at BankservAfrica, said even if the double-digit growth was temporary, the increase in median disposable salary was an indication that the number of people employed in the formal sector who had take-home salaries of over R10 000 per month had increased.
“Interestingly enough, July was the first month in the history of the index, during which 40 percent of all disposable salaries captured on the BankservAfrica system were over R10 000,” he noted.
Schüssler said people generally had scored big salary hikes and, with many sectors still bargaining over wage settlements, it was likely that the number of employees who earned a disposable salary of more than R10 000 a month might increase.
“Most industries are getting real increases and some jobs, over 100 000, have been created over the past year, which is good news for the retail sector.”
Schüssler said even though some consumers were using a significant amount of their disposable income to service debt, the salary increases meant they were able to spend. - Business Report