Quantec's Consumer Vulnerability Index (CVI) for South Africa has remained at the same level for the past six quarters - the longest period of sideways movement in the index observed to date. The improvement of consumer vulnerability which commenced in 2009, has reached a plateau, with all of the subcomponent variables having shown little change in the past quarter. After reaching dangerously high levels during 2008, the index had, by the end of 2010, dropped by nearly 29 index points (or roughly -37%). During the past two years, the index has been fluctuating in a narrow range around the 50-point mark, recording 51 over the six most recent periods.
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 still found themselves in a position of not generating savings on a net basis.
Employment growth also picked up slightly, but only twothirds of job losses that occurred during the recession had been restored by the end of the second quarter of 2012. The lack of improvement in residential property values meant that households' net worth remained under pressure. Credit uptake in real terms by households did appear to be picking up by the end of 2010, but stalled again during 2011. Real growth in credit extended to households did accelerate to around 2% y/y in the second quarter of 2012.
The economy's performance and the extent to which employment growth will continue in 2012/2013, will be crucial factors in determining households' ability to meet their debt obligations and further improve their financial vulnerability.