Latest news with #BankservAfricaTake-homePayIndex
IOL News
28-05-2025
- Business
- IOL News
South Africa's take-home pay growth slows as interest rate decision sooms
Average take-home pay in South Africa decelerated for the second consecutive month in April, intensifying focus on the interest rate decision by the SA Reserve Bank scheduled for Thursday. Average take-home pay in South Africa decelerated for the second consecutive month in April, intensifying focus on the interest rate decision by the SA Reserve Bank (SARB) scheduled for Thursday. The BankservAfrica Take-home Pay Index (BTPI), tracking salaries of approximately 3.8 million workers, reported a nominal average take-home pay of R17 495 in April, down 2.0% from R17 846 in March. Despite this slowdown, pay remains 13.8% higher than the R15 370 recorded a year ago. Shergeran Naidoo, BankservAfrica's head of Stakeholder Engagements, noted that while take-home pay has seen gains since mid-2024, recent global and domestic economic pressures are dampening momentum. 'The upward trend in salaries marked a positive shift after years of stagnation, but escalating global trade tensions are weighing on confidence, slowing economic activity,' Naidoo said. Real take-home pay, adjusted for inflation, also declined by 2.2% to R15 005 in April from R15 344 in March, though it remains above year-ago levels. Independent economist Elize Kruger noted that South Africa's consumer inflation, which dropped to 2.8% in April 2025, has bolstered purchasing power. 'With headline CPI projected to average 3.4% in 2025, down from 4.4% in 2024, we're seeing the lowest inflation since 2020's 3.3%,' Kruger said. She attributed this to a stronger Rand and falling international oil prices, which are expected to drive further fuel price cuts in June despite a recent fuel levy hike. However, economic challenges persist. Early data suggest South Africa's quarterly 2025 real gross domestic product growth may be flat or negative, reflecting global trade war impacts and subdued domestic demand. The repo rate, currently at 7.5%, translates to a real repo rate of 4.1% - well above the neutral rate of 2.8%. This restrictive monetary stance, combined with unchanged tax brackets and new levies from the 2025 National Budget, continues to squeeze households. Kruger said a modest 25 basis-point rate cut at the upcoming SARB Monetary Policy Committee meeting could provide relief. 'Lowering borrowing costs would ease pressure on households and businesses, potentially boosting confidence and investment,' she said. However, she cautioned that a more aggressive cut is unlikely given the SARB's cautious approach. Global trade disruptions and sluggish local growth have trimmed economic forecasts, raising concerns about job and income prospects. Kruger stressed the need for structural reforms to address energy, logistics, and governance bottlenecks. 'These reforms are critical to unlocking growth and shielding the economy from external shocks,' she said. The low inflation environment, supported by a recovering Rand and cheaper oil, offers the SARB room to ease monetary policy, following the lead of other developed and developing economies. Yet, debates over lowering the inflation target band could delay relief. 'Prolonged high interest rates are punishing the economy unnecessarily,' Kruger warned. As South Africans await the SARB's decision, the slowdown in take-home pay underscores the delicate balance between fostering growth and managing inflation. With global uncertainties looming, the central bank's next steps will be pivotal for salary earners hoping for financial respite. BUSINESS REPORT Visit:
IOL News
24-04-2025
- Business
- IOL News
BankservAfrica's indices reveal mixed signals for South Africa's economy in March
BankservAfrica Take-home Pay Index (BTPI) expected to be released on Thursday showed a slight dip in March 2025; however, BankservAfrica believes the broader trend has maintained its upward momentum BankservAfrica's much-anticipated Take-home Pay Index (BTPI) is set to reveal a small dip for March 2025, marking a slight retreat in the wage landscape of South Africa. Nonetheless, analysts at BankservAfrica asserted on Wednesday that the overall trend remained upward, buoyed by improving economic conditions in recent months, challenging the prevailing headwinds of escalating global trade tensions and increasing political uncertainty at home. Earlier this month, BankservAfrica showcased its Economic Transaction Index (BETI), which displays the standardised value of all economic transactions in the South African economy at seasonally adjusted real prices (2005=100). Notably, the BETI indicated a modest recovery in March 2025, with some crucial adjustments accounting for recent fluctuations. Shergeran Naidoo, BankservAfrica's Head of Stakeholder Engagements, reported that the BETI rose to an index level of 137.1 for March, reflecting a growth of 0.3% from February's figure of 136.6. Despite this marginal increase, it remains slightly below the January level of 137.2. Importantly, this annual data still suggested a healthier purchasing environment, driven by a headline inflation rate of 3.2%, which facilitates an increase in real wages and thus supports consumer buying power, in tandem with decreasing fuel prices and lower interest rates. "However, concerningly, this level fell slightly below the 137.2 recorded in January," Naidoo said. "Despite the mostly sideways movement, the BETI remains 2.8% above a year earlier, reflecting the favourable retail environment driven by headline inflation at 3.2% - supporting an increase in real wages and purchasing power - in addition to the fuel price drop and the interest rate at 75bps lower than a year earlier." However, independent economist Elize Kruger warned that the BETI's performance still suggested the economy was "stuck in muddling-along mode". This stagnant growth, marking a continuous pattern since mid-2024, raises alarms about South Africa's overall economic resilience, especially as population growth continues to outstrip economic progress. "The lack of momentum in economic growth is concerning, as the economy remains on the back foot, with population growth outpacing economic growth, minimal progress on employment, a precarious fiscal position, and limited capacity to absorb unexpected shocks – especially given current global developments," Kruger said. Meanwhile, BankservAfrica said that while it was still early days to measure the full impact of recent developments, Carpe Diem Research Services had revised the real GDP growth forecast for 2025 to 1.0% from the previous 1.5%. In 2024, South Africa's growth rate was 0.6%. "Other economic indicators were mixed in March, sending conflicting signals about the strength of the unfolding cyclical economic recovery. The S&P Global South Africa Purchasing Managers' Index (PMI) remained below the 50.0 'no-change threshold' for the fourth consecutive month," it said. BUSINESS REPORT
