Retail trade sales drop

According to the data released by Statistics South Africa (Stats SA) on Wednesday, retail trade sales at constant prices for October 2008 alone decreased by 2.3% compared to October 2007.

Impact on MPC meeting

The decrease is likely to have an impact on the decision the Monetary Policy Committee takes at its meeting which started Wednesday.

Speaking to BuaNews, Economist Mike Schussler said the drop will affect the South African Reserve Bank's Monetary Policy Committee (MPC) outcome on Thursday, which is expected to bring some relief to consumers with an anticipated 50 basis point cut in the repo rate.

“Most South Africans are still struggling to make ends meet ... the sales might pick up in December but that does not mean that we are off the hook yet.

“The whole financial crisis with commodities prices dropping is still a great challenge as it negatively impact on manufacturing and mining,” said Schussler.

The MPC kept the rate unchanged at 12% in August and October 2008.

Up from last year

However, retail trade sales at current prices, for the three months ended October 2008, increased by 11.6% compared to the same period in 2007.

The major contributors to this increase were general dealers, retailers in textiles, clothing, footwear and leather goods, retail trade in specialised food, beverages and tobacco stores, and all other retailers.

Negative contributors

Retailers in household furniture, appliances and equipment contributed negatively to the change in retail trade sales.

Retail trade sales at current prices for October 2008 increased by 13% compared with October 2007, while sales for the corresponding period in 2007 increased by 10.2%.

Manufacturing

Meanwhile, manufacturing figures released on Wednesday paint a bleak picture for the industry.

Stats SA reported the estimated seasonally adjusted manufacturing production figure for the three months ended October 2008 has decreased by 2.2% on the previous three months.

"Lower production levels were reported by seven of the ten manufacturing divisions," it said.

The major contributor was the basic iron and steel, non-ferrous metal products, metal products and machinery division (down 0.9 of a percentage point).

This was followed by the petroleum, chemical products, rubber and plastic products division (down 0.6 of a percent); the motor vehicles, parts and accessories and other transport equipment division (down 0.5 of a percent) and the furniture and other manufacturing division (down 0.2 of a percent).

Stats SA said that while manufacturing production for October 2008 decreased by 1.6% on October last year, it increased by 2.7% for January to October on the same period last year.

This was lower than the annual increase of 3.2% reported for January to September 2008.

The seasonally adjusted sales of manufactured products had also shown a decrease.

Article published courtesy of BuaNews