According to Ryan Tzamtzis, operations manager of Spark ATM Systems, June's high value is in line with consumer spending for this time of the year. "The high cash withdraw value is as a result of the 16 June Youth Day public holiday long weekend, coupled with the start of the mid-year school holidays. Consumers tend to spend more on entertainment and travelling on long weekends, public and school holidays."
However, Ronel Oberholzer, principal economist: Sub-Saharan Economics at IHS Global Insight notes that this does not indicate that consumers have more disposable income. "According to the latest BankservAfrica Disposable Salary Index (BDSI), household disposable income is still under pressure and real disposable salaries declined on a year-ago basis.
"The higher recorded averages for June are likely to reflect that consumers are being more conscious about how and where they spend their money, instead of spending on credit."
Tzamtzis points to the latest results from the National Credit Regulator (NCR), which indicated that unsecured credit is also starting to come down - recording an 11.2% decrease at the end of the first quarter of 2013. "Consumers are steadily becoming more aware that they can afford less. However, the SCI data reflects that each province recorded a month-to-month increase, illustrating that consumers opted to use more cash facilities instead of taking on more credit services."
Oberholzer says that this method of spending helps consumers to save over the longer term. "Interestingly, savings are up, but we do see that the price increases of semi-durables, such as clothing, have been lower than that of food and other durables. More people are likely buying from cheaper retailers that usually require cash payments rather than spending money on credit."
Going forward, Tzamtzis and Oberholzer both expect the July fuel price increases to reflect growth in average cash withdrawal values at petrol locations. "However, this will reach a tipping point and cash withdrawals at these locations will normalise again when people start saving by scaling down on driving."
The Northern Cape reported the biggest provincial average cash withdrawal value of R501.55 for June 2013, the second largest month-on-month growth of 4.90%, and the largest year-on-year growth of 16.69%. Average withdrawals in the Northern Cape are increasing and this amount is now higher than the peak in the December shopping period.
KwaZulu-Natal (R498.87) and the Eastern Cape (R494.04) recorded the second and third highest cash withdrawal values respectively.
The Free State province recorded the largest month-to-month withdrawal growth of 5.72% and the second largest year-on-year growth of 12.92%. "Average cash withdrawals in the Free State have been rising fairly consistently since the start of the year and are now above the highest previously recorded levels for this province, including the highs of the December shopping period," says Tzamtzis.
Unemployment in the Free State is also slightly down to 31.5%, from a high of 33.0% at the end of last year. "However, the high data for June is attributed to the increased withdrawals that would have been made as holiday makers stopped over in the province on their way from Gauteng to Cape Town and Durban," says Tzamtzis.
According to the June 2013 SCI statistics, wholesale locations recorded the highest average cash withdrawal value for the fifth month in a row at R491.71. "Wholesale locations continue to illustrate the highest average cash withdrawal values as more people likely buying in bulk to save in the long run, while more cash is needed initially to pay for those goods," says Oberholzer.
Tzamtzis adds, "Consumers can also readily find ATMs on these sites as they are usually placed where there is a high turnover."
Petrol sites (R477.28) and farming sites (R475.34) recorded the second and third highest cash withdrawal values respectively. "The higher farm minimum wages as well as extra labour for maize harvesting continues to promote higher withdrawals from farming locations," Tzamtzis says.
Leisure sites were the only locations that recorded a decrease in growth at 1.8%. This is attributed to consumers withdrawing cash at wholesale or retail locations as to save on costs of making multiple withdrawals at leisure sites later on. "With the school holidays extending into July, we could expect to see increases at leisure and retail sites," says Tzamtzis.
The SCI is a useful 'real-time' gauge of consumer spending, utilising the company's ATM systems' network of over 2000 ATMs located countrywide to reflect accurate, broad and timely cash demand and utilisation data. These ATMs are typically located in convenience stores, petroleum stations, specialist retail nodes and leisure & hospitality venues.
For more information, go to www.sparkatm.co.za.
