Economists comment on retail trade

Their comments follow the release of April retail trade sales, which according to Statistics South Africa rose 3.2% year-on-year (y/y) after a revised 2.7% (1.0%) growth in March.

Revised figures showed that retail sales figures have in fact been in positive territory since January this year, indicating an improvement in the demand-side of the economy.

Retail trade sales, at current prices, for April 2010 increased 5.4% compared with April 2009, while sales for the corresponding period in 2009 increased by 4.1%, Stats SA said.

Seasonally adjusted retail trade sales, at constant 2008 prices, for the quarter ended April reflected an increase of 1.8% compared with the three months ended January 2010.

Retail trade sales, at constant 2008 prices, for the three months ended April 2010 reflected an increase of 2.2% compared with the three months ended April 2009, while sales for the corresponding period in 2009 decreased by 5.1%.

Retailers in textiles, clothing, footwear and leather goods were star performers with a 7.8% increase and contributing 1.4 percentage points to the 2.2% increase.

General dealers were up 2.0% and contributing 0.8 of a percentage point.

Commentary

This is what economists had to say:

Kevin Lings, economist with Stanlib

"While consumers remain under pressure, there is a sense/expectation that the pressure will systematically ease during the course of 2010.

"This does not imply that the consumer will be able to effect a significant increase in discretionary spending during 2010/2011," said Stanlib economist Kevin Lings.

Nedbank economist, Isaac Matshego said:

"Retail sales are likely to continue expanding during the remainder of this year as consumer spending improves further."

Matshego added: "However the pace of recovery is likely to be limited by a still weak, although improving labour market and the negative impact of sharp increases in administered prices on real disposable incomes."

Jeff Schultz, of Absa Capital, cautioned not to be too excited by the 3.2% y/y increase.

"I'd caution not to read too much into this number because of the depressed labour market and still high household debt. We are likely to see a relatively modest recovery in the retail sector," he said.