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Pretoria - Spending growth in the economy accelerated in the third quarter as households' financial position continued to improve, partly due to lower interest rates, the central bank said on Thursday.
The South African Reserve Bank (Sarb) said in its December quarterly bulletin growth in gross domestic expenditure quickened to 5.8% on a seasonally adjusted and annualised basis in Q3, from a downwardly revised 1.6% in the second quarter.
Household spending growth accelerated to a seasonally adjusted and annualised 5.9% in the third quarter, compared with an upwardly revised 4.9% previously.
"The cumulative effects of the easing of the monetary policy stance and the concomitant decline in debt service cost bode well for households' confidence levels and expenditure going forward," the central bank said.
The bank has reduced the repo rate by a cumulative 650 basis points to 5.5% since December 2008 to help boost economic growth.
The ratio of household debt to disposable income ticked up to 78.5% in the third quarter, from 78.2% in the second quarter.
Households increased spending, particularly on services and non-durable goods, although this was offset by a drop in outlays on fuel and power.
Spending on services accounts for some 25% of total household spending.
In the first nine months of 2010, growth in real consumption expenditure by households amounted to 4.3% compared with the corresponding period of 2009, reflecting an improvement in expenditure by households in 2010 compared with a contraction of 2.0% in 2009 as a whole.
Higher wage settlements and low interest rates are starting to reflect in the economy, with the bulletin's figures showing that the real disposable income of households rose at a rate of 5.6% in the third quarter, up from 4.5% in the second quarter.
The net wealth of households had increased for the fifth consecutive quarter since the third quarter of 2009, the bulletin noted.
The South African Reserve Bank (Sarb) said in its December quarterly bulletin growth in gross domestic expenditure quickened to 5.8% on a seasonally adjusted and annualised basis in Q3, from a downwardly revised 1.6% in the second quarter.
Household spending growth accelerated to a seasonally adjusted and annualised 5.9% in the third quarter, compared with an upwardly revised 4.9% previously.
"The cumulative effects of the easing of the monetary policy stance and the concomitant decline in debt service cost bode well for households' confidence levels and expenditure going forward," the central bank said.
The bank has reduced the repo rate by a cumulative 650 basis points to 5.5% since December 2008 to help boost economic growth.
The ratio of household debt to disposable income ticked up to 78.5% in the third quarter, from 78.2% in the second quarter.
Households increased spending, particularly on services and non-durable goods, although this was offset by a drop in outlays on fuel and power.
Spending on services accounts for some 25% of total household spending.
In the first nine months of 2010, growth in real consumption expenditure by households amounted to 4.3% compared with the corresponding period of 2009, reflecting an improvement in expenditure by households in 2010 compared with a contraction of 2.0% in 2009 as a whole.
Higher wage settlements and low interest rates are starting to reflect in the economy, with the bulletin's figures showing that the real disposable income of households rose at a rate of 5.6% in the third quarter, up from 4.5% in the second quarter.
The net wealth of households had increased for the fifth consecutive quarter since the third quarter of 2009, the bulletin noted.
