Take-home pay improved for a second consecutive month in August, an indication that some industries have become progressively more resistant to the effects of load-shedding, with companies reducing their energy dependence on Eskom, a survey has found.
After a notable uptick in July, BankservAfrica’s take-home pay index published on Wednesday shows the average nominal take-home pay increased to R15,578 in August — 5.8% higher than a year earlier — and up from July’s R15,525.
BankservAfrica’s head of stakeholder engagements, Shergeran Naidoo, said that after having stabilised in the second quarter, nominal salaries increased in July and August despite an economic narrative that is largely unchanged.
“Encouragingly, indications that some industries have become progressively more resilient to the effects of load-shedding, as companies reduce their energy dependence on the embattled Eskom, has been an underlying positive development in recent months,” Naidoo said.
He added that the somewhat better performance of the S&P Global SA purchasing managers’ index, a composite gauge designed to give a single snapshot of operating conditions in the private sector economy, also speaks to August’s better outcome.
“With a reading above the 50 neutral mark in August for the first time in six months — at 51 and up from 48.2 in July — the index signalled a modest improvement in private sector operating conditions in August,” Naidoo said.
If sustained, the improved conditions in the private sector could be a supportive factor for employment and remuneration prospects, he added.
Independent economist Elize Kruger said that a notable moderation in consumer inflation over the past two months has increased the levels of real take-home pay. However, she warned that petrol price increases in September and October will push up inflation, increasing the erosion of households’ purchasing power.
Headline consumer inflation moderated from 7.1% year on year in March to 4.7% in July.
The consumer price index (CPI) “ticked up to 4.8% in August and while back into the Reserve Bank’s 3%-6% target band for three consecutive months the U-turn was unwelcomed”, Kruger said.
She added: “With estimates of petrol and diesel price increases at about R1/l and R1.50/l in early October, the cumulative increases over the most recent three months would be about R3/l for petrol and a notable R5/l for diesel. These increases will no doubt push headline inflation into a range of 5.5% to 5.9% for the next few months.”
She said consumer inflation is forecast to average 6% in 2023 compared with a 13-year high of 6.9% in 2022 — and 7.1% in 2009 — and should moderate further to average about 5.2% in 2024.
Kruger said that while the interest rate cycle has probably reached its plateau, the Reserve Bank is aware of the upside inflation risks posed in part by renewed rand depreciation and higher fuel prices.
“This will result in interest rates remaining elevated for some more months, with all other challenges remaining. With household finances already under severe pressure, this scenario remains negative for consumer spending and confidence levels,” she said.
Naidoo said BankservAfrica data adjusted for weekly payments suggests a slight improvement in the job market in the third quarter. He said about 187,500 more salaries were paid in July and August, almost offsetting second-quarter losses of 198,000 but also confirming the sideways trend in the number of salaries paid so far in 2023.
Kruger said that as economic realities remain largely unchanged into the second half of the year, the job market is likely to remain lacklustre in the rest of 2023.
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