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Retail sales beat expectations

20 October 2011

Retail trade sales in real terms increased by 7.1% year-on-year in August, beating market expectations, Statistics South Africa (Stats SA) reported on Wednesday.

Analysts had expected retail sales would rise to 4.9% from a revised 3% in July.

"The highest annual growth rate was recorded for 'all other retailers' (15.1%), followed by retailers in household furniture, appliances and equipment (14.3%)," Stats SA said.

December shopping season

Nedbank economists said retail sales were likely to moderate from August's strong growth rate, but should remain relatively firm up to the December shopping season.

"However, slower growth in consumer incomes and depressed consumer confidence are likely to dampen sales growth," the bank said.

"Growth in consumer disposable incomes slowed to 4.1% on an inflation-adjusted basis in the second quarter of this year after increasing by more than 5% per quarter in each of the prior three quarters, with higher inflation mainly behind the slower increase.

Domestic demand remains moderate

"Domestic demand growth remains generally moderate despite today's strong number and there are no visible demand pressures in the economy," said Nedbank.

In real terms, retail trade sales for the three months ended August 2011 reflected an increase of 4.1% compared with the three months ended August 2010.

The largest contributor to the 4.1% increase was "retailers in textiles, clothing, footwear and leather goods" (6% and contributing 1.2 percentage points), followed by "general dealers", Stats SA said.

"Domestic demand growth remains generally moderate, despite today's strong number, and there are no visible demand pressures in the economy. The current upward trajectory of inflation is mainly due to cost-push factors," Nedbank said.

"This, against the backdrop of a fragile global environment, is likely to prompt the Reserve Bank to maintain its cautious wait-and-see approach [to interest rates] in the coming months."

Source: BuaNews