A vibrant month: Pension boost expected to lift South African retail sales for February
Retail sales have been in the doldrums, weighed down by lockdowns, rising unemployment and a frail economy. But the latest BankservAfrica Take-home and Private Pensions report, calculated by Economists.co.za, suggests there could be a lift from a boost in pensions in February – though this may not be sustained.
Another green shoot has taken root as the summer season winds down.
The BankservAfrica Take-home and Private Pensions report for February, calculated by Economists.co.za, forecasts a consumer rebound for the month.
Retail trade sales for February will be released by Statistics South Africa (StatsSA) in April. In January, retail trade sales fell 3.5% year on year, the 10th straight month of decline.
“In February, government pensioners (and one or two other pension types) got extra payments, which resulted in nearly a million pension payments paid to an estimated 650,000 private pensioners in the BankservAfrica Private Pension Index (BPPI).
“As such, there has been a 61% real increase in total pensions paid for pensioners receiving less than R100,000 payment for the month of February. It also lifted the average BPPI by 5.6% year-on-year,” the report says.
“Total private pensions paid increased by 61% in real terms and added about R3-billion to the total spending in February, which equals the R3-billion that the ‘new state of disaster’ grant pays to six million unemployed people. This will help the economy as the money is likely to help quite a few informal businesses.”
The bottom line is that February may have been a relatively vibrant month for retail sales and consumption.
“The total nominal increase for all deducted money flowing into bank accounts of workers and private pensioners was 9.2%. This should result in a good consumer expenditure reaction for the South African economy for at least February,” the report says.
“One can expect retail sales and consumer services to soar in February. Although this may not be sustained in the months to come, the economy will get an unlikely and unexpected boost from civil servant pensioners spending the extra payments received.”
Stay tuned for more data on this front. The economy may still contract this quarter, but the outlook is not utterly bleak. DM/BM
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