SA Jan retail trade sales up

Yesterday's print breaks the eight months of consecutive negative moves by the retail sector.

Retail sales growth was expected by analysts to improve gradually this year due to a combination of interest rate cuts (in line with declining inflation and fears of slowing domestic growth, an increase in real wage growth, as well as some tax relief.

Stats SA said retail trade sales at constant (2000) prices for the three months ending January 2009 reflected a decrease of 1% compared with the three months ending January 2008, while sales for the same period in 2008 decreased by 0.1%.

Retail trade sales at current prices for the three months ending January 2009 increased by 11.7% compared with the three months ending January 2008. The major contributors to this increase were general dealers (5.4 percentage points), retailers in textiles, clothing, footwear and leather goods (2.6 percentage points) and retailers of food, beverages and tobacco in specialised stores (1.8 percentage points). Retailers in household furniture, appliances and equipment contributed negatively (-0.6 of a percentage point) to the change in retail trade sales.

Retail trade sales at current prices for January 2009 increased by 12.7% compared with January 2008, while sales for the corresponding period in 2008 increased by 11.1%.

Dealers in the bond market noted earlier that the market is now starting to price out the prospect of an interim rate cut, with today's retail news likely confirming that sentiment. Today's news will also be solace for policymakers who were becoming concerned about the country's growth prospects.

In total, the retail sector in 2008 registered nine negative months. The best was the 2.9% seen in February and the worst 5.6% in both August and September.

Total 2008 sales were at 2.2% from the 5.1% seen in 2007 and 9.6% in 2006, and marking the first annual decrease in nine years.

A revised total of R301,899 (301,903) billion was recorded at constant 2000 prices in 2008 from the R308,578 billion recorded in 2007, evidence of tighter conditions in a high interest rate environment. But the December growth level surprised some analysts as it was the best performance seen in the sector in eight months.

Total retail sales at constant prices in January 2009 were at R23,991 billion from R23,592 billion a year earlier and R34,103 billion in December, according to today's data.

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