Slower retail sales growth in June

The retail and motor trade‚ wholesale‚ and catering and accommodation sectors fall under an industry that makes up 12.5% of GDP.

Statistics SA (Stats SA) will release the GDP data later this month.

Retail trade sales measured in constant (2012) prices increased by 1.9% year-on-year (y/y) in June from a revised 6.0% (6.2%) y/y increase in May‚ Stats SA figures showed on Wednesday (14 August).

This was against an I-Net Bridge forecast of 2.8% y/y following a survey of economists. Forecasts among the nine economists polled ranged from 1.1% to 4.5%.

Measured in real terms‚ seasonally adjusted retail trade sales remained stable between May and June following month-on-month changes of 2.1% in May and -0.4% in April.

Investec chief economist Annabel Bishop said the flat movement in retail sales on the month were an indication that the financial health of consumers was not robust.

Higher costs hurt spending

Consumers are confronted with high electricity and fuel costs‚ while rising unemployment and lower wage increases are putting their disposable incomes under pressure.

Stats SA said that the highest annual growth rates were recorded for retailers in hardware‚ paint and glass (5.3%); all other retailers (4.9%); and retailers in textiles‚ clothing‚ footwear and leather goods (4.0%).

The main contributors to the 1.9% increase were retailers in textiles‚ clothing‚ footwear and leather goods‚ contributing 0.8 of a percentage point; all other retailers‚ contributing 0.5 of a percentage point; general dealers and retailers in hardware‚ paint and glass‚ both contributing 0.4 of a percentage point.

Figures showed that the seasonally adjusted retail trade sales increased by 1.0% in the second quarter of 2013 compared with the previous quarter.

"While this (1.0%) is below the growth rates achieved during most of 2012‚ it will tend to boost the second quarter estimate of GDP. In the first quarter the SA economy grew by a meagre 0.9% q/q‚ however‚ we expect the second quarter growth rate to be above 3% q/q‚" Stanlib economist Kevin Lings said.

Retail trade sales increased by 3.3% in the second quarter of this year compared with the second quarter of last year.

The main contributors to this increase were retailers in textiles‚ clothing‚ footwear and leather goods‚ increasing 7.3% and contributing 1.5 percentage points; all other retailers‚ rising 7.5% and contributing 0.8 of a percentage point; and general dealers‚ rising 1.5% and contributing 0.6 of a percentage point.

Nedbank economists expect growth in retail sales to remain subdued in the coming months.

"Consumers' real disposable incomes are under pressure because of higher food and fuel costs‚ while job prospects remain bleak‚" they said.

"Additionally‚ the prospect of labour instability in the mining and manufacturing sectors suggests that consumer incomes are likely to come under further pressure. This will constrain spending growth‚ particularly on non-discretionary goods," Nedbank added.