Growth in retail trade sales accelerated more than expected on an annual basis in June at 8.3% - their highest level since December last year‚ suggesting that consumer activity in the retail sector is better than currently estimated.
Retail figures are a key gauge of consumer spending. Consumer spending is the main engine of economic growth in SA.
Absa Capital economist Ilke van Zyl cautioned‚ however‚ that seasonal effects could also have played a role in the large year-on-year jump recorded by the highly volatile retail sales.
Data released by Statistics SA on Wednesday showed that retail trade sales shot up 8.3% on an annual basis in June from an upwardly revised 7.1% (6.4%) annual growth in May. This was much higher than the market expectations of just over 4.5%.
Most of the growth was driven by textiles‚ clothing‚ footwear and leather goods retailers.
The five Saturdays in June this year compared to four in June last year could have contributed to the jump in retail activity in the month according to Van Zyl. This had more impact on some retailers than others‚ she said.
"Base effects had more of an impact on textiles‚ clothing and footwear than in the general dealers category‚" Van Zyl said in an interview.
Real growth in retail sales in the second quarter could see the sector contributing positively to second quarter economic growth. The trade sector‚ which is made up of retail and wholesale trade sales among other components‚ accounts for some 13% of total gross domestic product (GDP).
Absa Capital forecast the sector to contribute between 0.5 and 0.6 percentage points to second quarter economic growth after a 0.4 percentage point contribution to the 2.7% economic growth in the first quarter.
Despite the improvement in retail sales in June and an interest rate cut last month‚ economic analysts still warn retail activity might be strained this year.
"[The] interest rate decrease made it easier for consumers to spend but ... with all the debt that they incurred in the past‚ they do not have excess money to service all their consumption‚ they still need debt to be able to make the end of the month‚" said Professor Bernadene de Clercq‚ head of the personal finance research unit at the University of SA.
The university's bureau of market research and MBD Credit Solutions released the consumer financial vulnerability index
on Wednesday‚ which showed that South African consumers became more financially vulnerable in the second quarter as a result of adverse international economic conditions‚ which are negatively affecting activity across sectors in the local economy.
The index declined from 58.9 points to 48.6 points in the second quarter - its lowest level since the fourth quarter of 2009 when economies were still in recession.