The sustained reduction of interest rates and relaxation of lockdown levels is providing a significant boost to the recovery of average income and cash flow among salaried middle-class consumers who hold full-time or formal employment.

This is according to FNB insights based on the income trends among its retail and private banking customers who earn a monthly gross income of between R10 000 and R60 000.

The bank states that the financial position of the average middle-income customer is now approximately on par with levels recorded in February 2020, before the implementation of the national lockdown.

Additionally, spend patterns of consumers are showing recovery with most categories like groceries and entertainment back to normal except categories like travel that are still significantly lower due to the travel bans instituted during lockdown.

In contrast, average income among informally employed and self-employed consumers continues to lag. As a result, this income group may take longer to regain their usual average income levels.

Raj Makanjee, chief executive of FNB retail and private banking, says: “The lockdown has been the toughest experience for consumers, emotionally and financially.

“However, the income recovery and improving cash flow among middle-income consumers bodes well for the economy as middle-class consumers have significant spending power.

“The timely adjustment of interest rates has been instrumental in cushioning consumers who are servicing debt against severe financial difficulty.

“Similarly, our cashflow relief measures have allowed our customers who earned partial or no income during lockdown levels 4 and 5, to manage the impact of this difficult period on their finances.”

According to FNB, the average income of consumers who are employed by SMEs (employing less than 10 people) was impacted the most over the course of lockdown.

The bank estimates that one in two of people employed by these SME businesses have seen a drop of at least 15% in average income. However, only one in five of those employed by larger companies (1 000 employees or more) experienced an average income drop of 15% or more.