After reaching dangerously high levels during 2008, the index had, by the end of 2010, dropped by nearly 29 index points (down roughly 37%). From the fourth quarter of 2010 through to the third quarter of 2012, the index remained flat at the 51-point mark, before its recent uptick to the 53 point level in the fourth quarter of last year.
Households' vulnerability improved over the past three years mostly in the areas of indebtedness. Lower interest rates ensured that debt servicing costs declined significantly, while households have made some strides in improving their dissaving behaviour.
Employment growth has also picked up slightly, and employment (measured as formal, informal and agricultural employment) reached an all-time high of 12,51 million people in the fourth quarter of last year. This implies that all of the job losses that occurred during the 2009 recession, have now been recovered.
The lack of improvement in residential property values meant that households' net worth remained under pressure and credit uptake by households have remained well below the median growth rate recorded since 1981.
The economy's performance and the extent to which employment growth will continue in 2013, will be crucial factors in determining households' ability to meet their debt obligations and further lessen their financial vulnerability.
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