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The average cash withdrawal values across South Africa for May 2012, was R425.94, a 4.81% year-on-year increase, the highest year-on-year increase in 2012 to dates, as measured by the Spark Cash Index (SCI). There was a month-on-month drop of 2.18%, a decline in consumer spending and trading conditions, following the spike in withdrawal activity during the holiday month of April 2012.
According to Marc Sternberg, MD of Spark ATM Systems, the drop in cash withdrawals was registered at all sites in the retail, wholesale and hospitality sectors. "While retail sales were higher than expected in April, the May decline in cash withdrawal activity probably suggests that domestic demand is stabilising."
Statistics SA confirm trend
Sternberg points to concerning signs of a possible loss of momentum in the local retail sector as latest data from Statistics SA show that retail trade sales (RTS) increased by 1% year-on-year in April 2012, which is lower than the 3.02% year-on-year increase in cash withdrawal activity recorded by the April 2012 SCI.
"The SCI is an accurate leading indicator of Stats SA's RTS report and, looking forward, retailers must be cautious, as the May 2012 RTS statistics could reveal a negative month-on-month decline but a positive year-on-year increase."
Stats SA's Retail Trade Sales (RTS) values follow the same pattern as South Africa cash withdrawal values. Released two months ahead of the RTS, the SCI figures therefore predict the pattern that RTS will follow.
"Consumer spending has been positive as we approach the midway point of 2012, but factors such as administered price increases and challenging global conditions are starting to erode purchasing power. However, household spending is still likely to be the main growth engine of the economy over the second half of the year and the low interest rate environment and stable inflation should continue to support consumer demand," concludes Sternberg.
According to Ronel Oberholzer, principal economist: Sub-Saharan economics at IHS Global Insight, the SCI drop in May was to be expected, following April's jump, which coincided with a large number of public holidays during which consumers spent their free time shopping and thus required more spending money. "The May figures can thus be seen as a correction from the previous month.
"Looking forward, growth in the SCI should stay in the lower single digits for the rest of 2012, reflecting a slowdown in domestic demand. Factors inhibiting consumer spending in 2012 include high consumer debt levels along with the banks' strict lending rules, lower real wage increases, employment concerns, increased taxes and elevated energy and services costs," says Oberholzer.
Provincial cash withdrawal trends
Mpumalanga reported the biggest provincial average cash withdrawal value of R454.08 for May 2012, followed closely by Limpopo (R448.81) and the Eastern Cape (R445.90) provinces.
Of the nine regions, Gauteng experienced the largest month-on-month withdrawal growth of 1.14%. "The Gauteng region also recorded the highest year-on-year increase of 9.02%, indicating that the demand for convenient access to cash in the province is growing significantly. The province's withdrawal growth is being fuelled by increased trade activity in petrol, retail and wholesale sites," says Sternberg.
With the month of May following the busy April holiday period, every region with the exception of Gauteng showed a significant drop in the month-to-month withdrawal values. Conversely, every region recorded a year-on-year increase, with the exception of Limpopo; signifying consumer spending has increased since May 2011.
Site category trends
According to the May 2012 SCI statistics, wholesale locations came out tops - for the third month running - by recording the highest average value of cash withdrawals at R439.65. The second highest location withdrawal value of R434.65 was recorded by petrol stations and retail* finished in third, recording a location withdrawal value of R419.45 for May 2012.
The highest month-on-month growth was 6.37%, recorded by farming locations, which also saw a year-on-year increase of 3.24%. "This increase is in line with other growth factors in the sector, such as the recent announcement by the South African Agricultural Machinery Association of a 30% year-on-year increase in tractor sales."
The highest year-on-year growth figure of 14.96% was recorded by wholesale locations, which is in line with the increasing trend of consumers purchasing items from wholesale outlets, in an effort to reduce daily expenses.
The SCI is a useful 'real-time' gauge of consumer spending, utilising the company's ATM systems' network of over 1400 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.
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