Boost in December ATM withdrawal activity points to improved SA Consumer Spending

The December 2012 value of R485.07 is the highest average withdrawal value recorded by the SCI to date.

January 9, 2013

Latest statistics released by the Spark Cash Index (SCI)*, which measures the average value of cash withdrawals across more than 2 000 Spark ATMs throughout South Africa, revealed a 5.99% year-on-year increase to R485.07 in December 2012 from R457.67 in the same month in 2011, indicating that consumer spending was more robust at the end of 2012 compared with the previous year.

Russel Berman, Sales Director of Spark ATM Systems, says the December 2012 value of R485.07 is the highest average withdrawal value recorded by the SCI to date. In addition, the month-on-month growth of 9.57% is the second highest month-on-month growth ever recorded. “A combination of higher salaries, year-end bonus payouts and lower debt services costs most likely contributed to the notable increase in ATM withdrawal activity over the 2012 festive period.”

He says it is incredibly positive to note the significant 10.51% year-on-year increase recorded at leisure and hospitality sites, signifying that the local tourism industry benefited from the recent festive season spending boom. “It is interesting that the Eastern Cape (R520.71), Mpumalanga (R512.61) and KwaZulu-Natal (R508.87) provinces recorded the top three average cash withdrawal values across the country, suggesting that these were the most popular holiday destinations for South Africans this December.”

However, Ronel Oberholzer, Principal Economist at IHS Global Insights, says that the notable increase in ATM activity in the Eastern Cape could also be a result of the motor industry’s success in this province, with good vehicle sales and exports resulting in employees being rewarded for this in terms of bonuses as well as more people being employed in the province.

Wholesale locations recorded the highest average cash withdrawal value of all sites (R509.51), as well as the largest month-on-month and year-on-year increases of 11.66% and 18.44% respectively. “This is a clear sign that consumers were definitely more price sensitive this festive season by buying food and drink in bulk to save on the per unit price. Petrol sites also revealed a large month-on-month growth of 8.45% which is merely a result of petrol being more expensive than the previous year,” says Oberholzer.

While December is typically a very active month, there is a clear seasonal trend of a drop in ATM withdrawals across the country for January and we expect this year to be no different, says Berman. “This decline is mainly a result of January being a very long financial month as many people receive their salaries and bonuses early in December, which is subsequently spent on festive season entertaining and gifts. However, we do not expect the slowdown in activity to erase all the gains for December.”

ADDITIONAL INFORMATION ON ATM WITHDRAWAL TRENDS

Provincial cash withdrawal trends:
The trend of the Mpumalanga province coming out tops has been broken for the first time in ten months, with the Eastern Cape revealing the highest average cash withdrawal value (R520.71), month-on-month (11.95%) and year-on-year (10.235) growth.

“Gauteng, which recorded the second highest year-on-year growth of 9.63%, saw strong withdrawals which were most likely a result of people buying their goods before travelling to their holiday destinations. Overall each province – with the exception of Limpopo which experienced a minimal year-on-year decline of 0.56% – revealed positive month-on-month and year-on-year growth indicating strong consumer spending across the country,” says Berman.

Site category cash withdrawal trends:
For the ninth consecutive month, wholesale locations recorded the highest average cash withdrawal figure of R509.51, in addition to the largest month-on-month increase of 11.66% and year-on-year increase of 18.44%. Retail sites came in second highest with an average withdrawal value of R476.78 and month-on-month growth of 9.79%, followed by petrol sites with a value of R476.52, which also recorded an 8.45% month-on-month increase.

“Farming locations noted the largest year-on-year increase of 15.32% which means that many farmworkers most likely withdrew their year-end bonuses to take home with them for the festive season,” says Berman.