Johannesburg — THE number of civil summonses issued for non payment of debts rose 11,5% in June from a year earlier, as people failed to meet payments on credit cards and cheques bounced.

The number of summonses recorded by magistrates' offices jumped to 122749 in June from 110057 a year earlier. The largest contribution to the rise came from the category of debt that included promissory notes, credit cards and dishonoured cheques. The second-largest came from "open account" or revolving credit agreements.

Stripping out individual debtors, the number of summonses issued against businesses rose 12% to 16334. The number of judgments against bad debtors, an indicator that lags summonses, rose 11,8% to 64126.

The picture for SA's troubled debtors is likely to worsen before it improves -- 267000 jobs were lost in the second quarter of this year, on top of the 208000 that were shed in the first quarter. While falling interest rates give some relief on debt repayments -- the Reserve Bank has cut rates by five percentage points since December -- the dismal labour market will tip more people into trouble.

Economic Development Minister Ebrahim Patel yesterday warned of a second round of job losses in months to come as earlier retrenchments led to still-lower demand.

"With more job losses expected in coming months, the number of civil summonses issued is likely to remain elevated well into 2010," said Kgotso Radira, an analyst at Investec .

The economy contracted for a third quarter in a row in the three months ending in June, and the report showed that much of the problem lay with the consumer sector.

Retail and wholesale sales together account for 14% of the economy. This sector contracted 4,5% in the second quarter, faster than the 2,5% decline seen in the first. A separate report last week showed retail sales in the year to June fell 6,7%.

While consumer debt fell slightly from its recent high of 78,2% of household income in the first quarter of last year, it has been creeping up again. It fell to 75,5% in the third quarter of last year, but rose to 76,7% by the first quarter of this year. Debt is one factor holding back consumers from spending the economy out of recession.

While the rate cuts were meant to kick-start consumer spending, this has yet to happen. People who have cash are trying to pay back debt. In addition to the job losses and uncertainty about future losses, banks are applying stricter lending criteria and making it more expensive to borrow.

All these factors were "diluting" the effect of interest rate cuts, Elna Moolman, group economist at Barnard Jacobs Mellet , said yesterday.