August retail sales higher than expected

17 Oct 2013

Retail trade sales rose more than expected in August‚ with economists warning‚ however‚ that there were still challenges to consumption expenditure that could see retail sales come under pressure.

Retail sales went up in August. Image:freedigitalphotos.net

Economists said the disposable incomes of households‚ which may rise on higher wage increases‚ were being negatively affected by increases in administered prices.

Retail trade sales measured in constant (2012) prices increased by 3.0% year-on-year (y/y) in August from a revised 2.9% (2.8%) y/y increase in July‚ Statistics SA figures showed on Wednesday (16 October).

This was against an I-Net Bridge forecast of 1.3%. Forecasts among the 10 economists polled ranged from -0.3% to 2.0%.

The main contributors to the 3.0% increase were retailers in textiles‚ clothing‚ footwear and leather goods‚ contributing 1.6 percentage points and general dealers‚ contributing 1.1 percentage points.

"The unexpected improvement in retail sales growth is encouraging‚ but the strong momentum is unlikely to be maintained in the months ahead‚" said Nedbank economist Johannes Khosa in a research note.

This would be based on the fact that recent strikes would have negatively affected household earnings‚ while disposable income was under pressure from unemployment.

Stanlib chief economist Kevin Lings cautioned against reading too much into one month's data‚ suggesting instead that an analysis of consumption expenditure patterns on a trend basis could give a better indication of the sector's performance.

"On a trend basis‚ consumer spending has been losing momentum for some time and is expected to remain under pressure over the coming months‚" Lings said.

Measured in real terms‚ seasonally adjusted retail trade sales rose 1.1% between August and July following month-on-month changes of -0.4% in July and 0.9% in June.

Seasonally adjusted retail trade sales rose by 0.8% in the three months ended August 2013 compared with the previous three months.

"Despite a better than expected August retail print‚ momentum has slowed and on a quarter-on-quarter seasonally adjusted and annualised basis‚ retail sales are now only growing 3.2%‚" Citi economist Gina Schoeman said.

Retail trade sales rose by 2.4% in the three months ended August 2013 compared with the three months ended August 2012.

The main contributors to the 2.5% increase were retailers in textiles‚ clothing‚ footwear and leather goods; retailers in hardware‚ paint and glass; and general dealers.

Source: I-Net Bridge

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