Quantec's Consumer Vulnerability Index (CVI) has edged upwards in the fourth quarter of 2012, possibly indicating that the easing of consumer vulnerability which commenced in 2009, has ended. 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 year, the index has been fluctuating in a narrow range around the 50-point mark.
Households' vulnerability improved over the past three years mostly in the areas of indebtedness. Low interest rates ensured that debt servicing costs declined significantly, while households' savings efforts also showed some improvement, although they still found themselves in a position of dissaving. Employment growth also picked up slightly, but only a third of job losses that occurred during the recession had been restored by end-2011. The lack of improvement in residential property values meant that households' net worth remained under pressure. Credit uptake by households did appear to be picking up by the end of 2010, but recent numbers suggest that this growth is again subsiding. The economy's performance and the extent to which employment growth will continue in 2012, will be very important determinants of households' ability to meet their debt obligations and further improve their financial vulnerability.