Retail sales down ahead of festive season
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Fin24 - Dec 8th 2011, 08:34
Johannesburg - Growth in South Africa’s retail sales slowed to 7.4% year-on-year (y/y) at constant prices in October from a downwardly revised 7.7% in September, Statistics South Africa said on Wednesday.
On a month-on-month basis retail sales were at 0.6% in October. Stats SA said retail sales grew by 7.6% in the three months to October, compared with the same period a year ago, also at constant prices.
Economists polled by Reuters last week expected retail sales growth to slow to 7.7% y/y from 8.3% previously reported by the statistics agency.
Merina Willemse, economist at Efficient Group, said: “It’s not really bad, even though its below expectations.
"It’s for the month of October and I think on the whole retail sales’ contribution to GDP (gross domestic product) will be a bit positive in the fourth quarter compared to the third quarter.â€
Razia Khan, head of Africa research at Standard Chartered said it was too early to draw a conclusion from the figures.
“It may still be too early to draw any hard conclusions, and we would caution against doing this until we get evidence of the strength of spending in November and December, in the run-up to Christmas.
“Nonetheless, the sense that is creeping in is that previously retail sales - and related to this vehicle sales - were the only data that gave one a glimmer of hope about future economic prospects."
Interest rates at three-decade lows have been supportive of retail sales growth, which has surprised on the upside in the last few months.
Consumer expenditure boosted economic growth in the third quarter, with GDP growth rising to 1.4% as demand-related sectors grew while productive sectors such as mining, agriculture and manufacturing contracted.
The high level of unemployment and debt levels that are still close to record highs might keep retail sales growth subdued. The economy has shed more than a million jobs since a recession in 2009.
Retail spending was the driver of the economy between 2003 and 2007, when South Africa’s economic growth averaged 5.0% a year. The government cut its 2011 growth forecast to 3.1% due to sluggishness in the global economy.
The South African Reserve Bank has left the repo rate at 5.5% this year, after cutting it by a cumulative 650 basis points between November 2008 and November 2010.
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