Retail trade sales expected to decrease

Forecasts among the seven economists ranged from 4.5% to 8.7%.

Brait economist Colen Garrow said that with the number of public holidays in April, retailers experienced a bonanza during the month.

"With fewer public holidays in May, it is unlikely that growth this stellar can last for long. Although household debt remains high - 76.8% of household disposable income in the first quarter of 2011 - anecdotal evidence indicates that households are beginning to postpone consumption, in favour of winding down debt," he said.

Garrow added that, although this should have an adverse impact on retailers, it was important to highlight that not all types of retailers ran at the same speed.

"Pharmaceutical retailers have generally been outperforming hardware and paint retailers, he said.

Absa Capital economist Gina Schoeman said retail sales were expected to grow 8.5% y/y in May, after surprising "hugely" to the upside in April at 9.8% y/y.

"Anecdotal evidence from the listed retail sector leads us to believe that clothing and footwear sales will remain strong," she said.

Meanwhile, Standard Bank economists Adriaan du Toit and Shireen Darmalingam said that a slowdown was expected after brisk sales in April.

"Although we had the highest forecast for April retail sales - 6.1% y/y versus consensus of 5.0% y/y - we still underestimated the buoyancy in sales by quite a margin.

"The big y/y change was driven by increased sales from retailers in textiles, clothing, footwear and leather goods at 16.9% y/y, from 3.4% y/y in March; pharmaceutical and medical goods, cosmetics and toiletries at 13.7% y/y from 5.6% y/y, and household furniture, appliances and equipment at 13.1% y/y from 11.6% y/y," the economists said.

However, the economists added that they believed the series of holidays in April drove the sharp increase in sales, and the momentum would not be sustained.

"We forecast a moderation in retail sales growth, to 5.8% y/y in May," they said.

The May retail trade sales data will be released by Statistics SA at 13:00 on Wednesday, 20 July.