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Valentine's Day results in retail focus
Valentine's Day on Tuesday will make sure that this week the focus is on the consumer, as online retailers are likely to say how well this year's sales were compared with last year, while the official data will show how much consumers spent last year with the retail sales due on Wednesday, while the following day the Bureau of Market Research will release its fourth quarter 2011 Consumer Financial Vulnerability Index.
Standard Bank expects retail sales to have been robust as household spending was the main impetus of economic growth in 2011.
"Total credit extension to households picked up by 6.7% year on year (y/y) in December, from 5.4% y/y in November.
"Corporate credit extension was also buoyant, rising to 8.2% y/y in December, after easing to 6.8% y/y in November," Standard Bank said.
Yumna Ebrahim from Econometrix noted that in comparison to retailers in the UK and US, South African retailers have proven to be resilient.
"The University of SA's Bureau of Market Research (BMR)'s sentiment is that retail sales will hold ground going forward.
"In this regard, retailers showed upbeat confidence in late 2011. This could be attributable to an increase in impulse shopping during the Christmas season and the effect of favourable interest rates on consumer spending.
"On the downside however, one should be vigilant of the effect that slow employment growth, higher inflation rates and high electricity prices have on hampering margins in the retail sector," Ebrahim said.
Manqoba Madinane from Econometrix expects December real wholesale trade sales, due for release on Thursday, to show a continued slowdown in the y/y increase due to higher inflation.
Real wholesale trade sales growth declined significantly from 9.4% y/y in October 2011 to 5.8% y/y in November 2011.
"This surge in inflationary pressures has negative implications for the December wholesale trade sales growth figure.
"However, one anticipates that the Christmas spending boom may have supported wholesale trade in food, beverages and textiles which would have provided some support to overall wholesale trade sales growth for December," Madinane said.
Civil cases for debt, also due on Thursday, should show a continued repair of household balance sheets.
"Civil cases for debt likely continued their descent with the y/y change likely to have closed out 2011 in negative territory, on the back of improving consumer creditworthiness.
"While these trends are encouraging, households have some way to go in shoring up their balance sheets.
"Household credit uptake saw an uptick in December; however, the overall trend in 2011 was subdued despite the presence of decades-low interest rates.
"This is likely a reflection of elevated existing debt, an uncertain economic outlook, and soft consumer confidence.
"These macroeconomic factors may serve to continue to rein in household credit uptake," Standard Bank said.
Source: I-Net Bridge
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