Latest news with #Take-homePayIndex
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
Zawya
27-02-2025
- Business
- Zawya
Salaries in South Africa surpass expectations with strong January growth
South Africa's salary earners started 2025 on a strong financial footing, with take-home pay reflecting steady growth. According to BankservAfrica's Take-home Pay Index (BTPI)—which tracks the average nominal take-home pay of approximately 4 million salary earners—the average take-home salary surged to R18,098 in January 2025, marking a significant rise from R17,246 in December 2024 and R15,564 a year earlier. 'The upward trend in take-home pay signals positive developments in the earnings landscape,' says Shergeran Naidoo, BankservAfrica's head of Stakeholder Engagements. This growth suggests improved economic conditions, wage adjustments, or sectoral shifts benefiting employees across industries." The upward trend in average salaries started early in 2024, and despite some monthly volatility, nominal take-home pay continues to tick higher. 'This positive remuneration trend evident in the BankservAfrica sample reflects a generally improved business environment, notable moderation in inflation, higher confidence levels in the economy, and three interest rate cuts that have provided much-needed relief,' says Elize Kruger, independent economist. Company profitability also improved during 2024, as reflected in the above inflation increase in the gross operating surplus of companies. The improving environment was also echoed in the sizeable total return on the FTSE/JSE All Share Index in 2024 (+13.4%), reflecting the promising earnings potential of listed companies. In real terms, take-home pay also increased to R15,659 in January 2025, a notable 12.8% up on year-ago levels, and reached its highest level since February 2022, according to Naidoo. This was driven by the significant moderation in consumer inflation during 2025, from 5.3% in January to 3.0% in December, which has had a positive impact on the purchasing power of salary earners. Additionally, the headline CPI averaged 4.4% in 2024, the lowest annual rate since 2020. 'As such, the real take-home pay averaging at R14,292, up by 3.1% in 2024, represented the first real increase in take-home pay since 2020,' says Kruger. On the assumption that inflation will remain well-contained in 2025, with the average headline CPI forecasted to be at 4.2%, 2025 could be the second consecutive year of positive real take-home pay growth. The observed recovery in disposable income has been reflected in healthier retail sales, with real retail sales growth for 2024 at 2.5% higher than the previous year, compared to -1.2% in 2023. Passenger car sales have also started to recover towards the end of 2024, with full-year growth of 1.1% compared to the 4.3% contraction in 2023. The cumulative 75bps reduction in interest rates and Two-Pot Retirement System withdrawals would have supported consumer spending. Salaries expected to improve – provided current conditions hold Looking ahead to 2025, the economic outlook indicates that the salary gains seen in 2024 could continue to strengthen. On the economic front, real GDP growth is forecast to increase by 1.7% in 2025, somewhat higher than in 2024. The acceleration in growth will be driven by a combination of improved household consumption expenditures, higher fixed investment spending, and further advances in structural reforms. An ongoing focus on improving South Africa's electricity generation capacity, addressing supply-chain blockages relating to freight rail and port operations, and upgrading water infrastructure, among others, are much-needed actions to propel the economy forward. 'The anticipated improvement in the business environment is expected to enable companies to offer more substantial salary increases in 2025, which in combination with a moderate inflation environment, could mean a second consecutive year of a real increase in take-home pay,' says Kruger. However, if the 2025 National Budget had been tabled with the 2% VAT increase, it would have derailed the positive inflation outlook somewhat, eroding the fragile recovery in the purchasing power of salary earners. 'While we await the revised budget on 12 March 2025, the postponement has introduced uncertainty, raising concerns about its potential impact on the economy's recovery prospects,' ends Kruger.
