Advertise with fastmoving.co.za
 
 

Spending on durable goods such as cars contracted 11.2% in the second quarter, reflecting preemptive purchases ahead of the VAT increase.
Spending on durable goods such as cars contracted 11.2% in the second quarter, reflecting preemptive purchases ahead of the VAT increase.

Households spend less in second quarter as drop in disposable income bites hard

ECONOMIC NEWS

By Sunita Menon - Sep 25th 2018, 10:33

Households were under strain in the second quarter of 2018, a report from the SA Reserve Bank shows.
 

The quarterly bulletin indicated that household consumption fell to levels last seen two years ago in the second quarter of 2018. Compared to the first quarter, when household consumption expenditure was 1% higher than in the previous quarter, it contracted 1.3% in the second quarter as spending on goods declined while spending on services increased at a slow pace.

Notably, spending on durable goods such as vehicles or household items contracted 11.2% in the second quarter. This reflected preemptive purchases ahead of the VAT increase, which took hold on April 1, as well as the subdued economic environment, the bank said.

"The decline in household real disposable income, largely due to tax increases and fuel-price hikes in the second quarter of 2018, adversely affected real household consumption expenditure," the quarterly bulletin reads.

However, in spite of the contraction in the second quarter, households are still in a better position than they were in 2017. In the first half of 2018, household spending was 2.3% higher than in the same period in 2017.

Meanwhile, SA's international investment position deteriorated in the first three months of 2018 as the value of foreign assets decreased more than foreign liabilities.

This was a steep drop to R362bn at the end of March compared to R476bn at the end of December 2017. Outward investment decreased 3.5% to R6.67-trillion in the first quarter of the year after a decrease of 2.9% the previous quarter.
Business Live 

Related News

South Africans are spending less on their weekly shopping trip
23/05/2019 - 09:44
Tiger Brands, which carries brands including Koo canned foods, All Gold, and Tastic rice, said that revenue from continuing operations fell 2% to R15.4 billion in the interim period.

Another recession in 2019 is probable, warns Old Mutual economist
22/05/2019 - 10:21
SA will probably enter another recession given the weak performance in the first quarter of 2019, Old Mutual Investment Group chief economist Johann Els warned.

Contraction in economy looms in the first quarter
17/05/2019 - 09:16
Weak performances in the retail, mining and manufacturing sectors, which bore the brunt of the most severe power cuts the country has experienced yet, indicates that the economy contracted in the first quarter of the year.

Retail sector barely budged in March
16/05/2019 - 09:54
Consumers were under pressure in March with a 74c/l hike in the petrol price and slightly higher inflation.

Load-shedding knocks mining and manufacturing in the first quarter
13/05/2019 - 09:36
Despite a better performance in March, both sectors recorded contractions in the first quarter of the year - with production severely constrained by load-shedding.