According to Marc Sternberg, MD of Spark ATM Systems, this is most likely a result of mid-year school holidays starting a bit earlier this year.
"An extra two days of the total 21 days of mid-year school holidays fell in June this year. As school holiday spending is traditionally quite heavily weighted at the beginning of the holiday period, June 2012 ATM withdrawal activity recorded a significant increase month-on-month, with the knock-on effect being a slight decline in July 2012."
David Wilson, senior analyst at IHS Global Insights, says the full impact of the interest rate cut on consumer spending will be felt towards the end of 2012. "To date, consumers have remained cautious of spending, fuelled by recent factors such as electricity tariff increases in the winter months. However, the recent interest rate cut will most probably boost spending and thus cash withdrawals again in the coming months."
Sternberg adds that as the SCI has proven a reliable leading indicator for Stats SA Retail Trade Sales (RTS) figures, it is likely that July RTS figures will also show similar positive growth year-on-year.
The rate of year-on-year growth of withdrawal values in each of the first seven months of 2012 has been higher than in the previous year, suggesting that consumer spending has grown at a faster rate than in 2011.
He explains that the recent repo rate cut is particularly timely for retailers and should ensure that cash withdrawal and consumer spending activity remains strong for the remainder of 2012. "This is the first interest rate cut since November 2010 and historically the SCI has recorded an uptick in cash withdrawal activity post a reduction in the prime interest rate.
"This shot in the arm to consumers' disposable income will ensure that they pay less interest on debt, effectively stimulating consumer spending activity for the remainder of 2012."
For the seventh month running, Mpumalanga recorded the highest provincial average cash withdrawal value of R470.04 in July 2012 and the largest month-on-month growth of 2.82%. "This region is showing considerable growth due to increased tourist traffic during the school holidays and increased cash withdrawal activities by farm workers who reside in this region," says Sternberg.
Gauteng recorded the highest year-on-year growth of 8.30% for the third month in a row this year, followed by the Northern Cape and Eastern Cape revealing growth of 8.10 and 5.83% respectively.
"A year-on-year increase in cash withdrawal activity was recorded across all provinces, with the exception of Limpopo, suggesting positive year-on-year growth in consumer spending across the country," says Sternberg.
For the fifth consecutive month, wholesale locations revealed the largest average cash withdrawal figure of R451.66, as well as the highest year-on-year increase of 18.55%. Petrol sites came in second highest followed by retail locations which recorded values of R439.81 and R426.95 respectively.
Farming locations recorded the biggest month-on-month growth of 1.30% for the third month in a row, as well as the second highest year-on-year growth of 9.09%.
"The consistent patterns of boosted ATM withdrawal activity at wholesale locations and farming locations should be noted as these sites are clearly becoming primary spots for easy access to cash," says Sternberg.
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.