Positive retail trade sales may offer some relief
By Asha Speckman - Aug 14th 2017, 08:41
A jobs bloodbath looms over the retail sector, but economic data expected this week may show that retail trade sales continued with a trend of positive growth in June.
Some retailers are taking strain in the poor economic climate, with Pick n Pay recently announcing 3,500 retrenchments. But retail trade sales have long since turned the corner from the dismal -3.5% annualised growth recorded in the first quarter of 2017.
By May, retail sales had risen for a fourth straight month and this was expected to continue into June, buoyed by "lower statistical base effects", economists said on Friday.
The positive effect of moderating inflation on the purchasing power of consumers was another benefit, Elize Kruger, senior economist at NKC African Economics said.
However, Johann Els, head of economic research at Old Mutual Investment, said the recent 25 basis point cut in rates was unlikely to benefit retail sales in the short term.
"Even our anticipated 100 bps of rate cuts over the cycle will have a relatively small overall direct impact on consumer finances."
But the cut was a slight consumer confidence booster, Els said.
Retail trade sales, which Statistics SA will publish on Wednesday, is yet another gauge of economic health besides mining and manufacturing data.
NKC African Economics has forecast a 2.4% year-on-year unadjusted growth in June and a 2.6% improvement on a month-on-month seasonally adjusted comparison. Investec economist at Kamilla Kaplan predicted sales growth of 2.5% in June compared with 1.7% in May.
On Tuesday, the South African Chamber of Commerce will publish its trade conditions survey for July. In June, trade conditions remained in negative territory, with a trade activity index rating still below the neutral 50 mark, at 48. Survey respondents cited not only prevailing depressed economic conditions but also currency volatility, bureaucracy, corruption, political uncertainty, lack of fixed investment and unpredictable economic policy as impediments to trade.
On Thursday, Statistics SA will release statistics for civil debt cases for June. The number of civil summonses and judgments declined in the three months to May.
Statistics SA will also publish on Thursday motor trade sales for June and selected building statistics of the private sector as reported by local government institutions in June. © BusinessLIVE MMXVII
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