JOHANNESBURG - The average income for South Africa’s middle-class has recovered to levels seen before the government imposed a lockdown in late March aimed at slowing down Covid-19 transmission, First National Bank said on Wednesday.
It said the sustained reduction of interest rates and relaxation of lockdown restrictions was providing a significant boost to the recovery of average income and cash flow among salaried middle-class consumers holding full-time or formal employment.
FNB’s analysis of income trends among its retail and private banking customers who earn a monthly gross income of R10,000 to R60,000 (US$3,666) showed that the financial position of the average middle-income earner was now approximately at par with February levels.
Additionally, spending patterns were showing recovery, with most categories like groceries and entertainment back to normal except those like travel which were still significantly lower due to bans instituted during lockdown.
In contrast, average income among informally employed and self-employed consumers continued to lag, with this income group likely to take longer to regain their usual average income levels.
“The lockdown has been the toughest experience for consumers, emotionally and financially,” FNB chief executive of retail and private banking Raj Makanjee said.
“However, the income recovery and improving cash flow among middle-income consumers bodes well for the economy as middle-class consumers have significant spending power.”
He said the timely adjustment of interest rates had been instrumental in cushioning consumers who were servicing debt against severe financial difficulty.
According to FNB, the average income of consumers working for small and medium enterprises employing less than 10 people was impacted the most over the course of the lockdown.
An estimated one in two of people employed by these businesses had seen a drop of at least 15 percent in average income.
This was against only one in five of those employed by larger companies, with a workforce of 1,000 or more, experiencing an average income drop of 15 percent or more.
- African News Agency (ANA)