Re­tail growth pos­i­tive

Firmer rand tra­jec­tory can see early in­ter­est rates cut de­pend­ing on an­nounce­ments from new ad­min­is­tra­tion

The New Age (Free State) - - INSIDE - BERNARD SATHEKGE bernards@the­newage.co.za

RE­TAIL sales rose by 5.3% y/y in De­cem­ber, beat­ing mar­ket ex­pec­ta­tions of 4%, Sta­tis­tics SA fig­ures showed yes­ter­day.

This un­ex­pected rise came on top of a strong 7.9% in Novem­ber.

Month-on-month, sales were down 2.6% but rose 5.6% in the three months to De­cem­ber com­pared with the same pe­riod last year, Sta­tis­tics South Africa said.

The best growth was recorded for “all other” re­tail­ers, in­creas­ing by 14.7%. Re­tail­ers in house­hold fur­ni­ture, ap­pli­ances and equip­ment in­creased sales by 10%.

Fur­ther, gen­eral deal­ers, re­tail­ers in tex­tiles, cloth­ing, footwear and leather goods also con­trib­uted pos­i­tively in De­cem­ber.

Although re­tail trade sales de­creased by 2.6% month-on-month, from 3.8% in Novem­ber, the reality is that the growth will con­trib­ute sig­nif­i­cantly to­wards the first quar­ter GDP growth num­bers of 2018.

An­a­lysts said over­all, re­tail sales recorded pos­i­tive growth in the fi­nal quar­ter of 2017.

Some economists said more im­por­tantly is the fact that in the three months to De­cem­ber, re­tail sales rose sig­nif­i­cantly by 5.6%, heav­ily boosted by the Novem­ber sales.

“The 12-month mov­ing av­er­age rate of an­nual growth is clearly still trend­ing weaker, de­spite the Novem­ber boost in sales (helped by Black Fri­day) and is ex­pected to slow fur­ther in 2018, un­less the econ­omy re­bounds quickly and more jobs are cre­ated,” Ju­dith Modise, a con­sumer con­sul­tant, said.

Modise said an im­prov­ing po­lit­i­cal land­scape in­clud­ing ris­ing busi­ness con­fi­dence should help as more peo­ple will be em­ployed and that will in­crease spend­ing.

“South African con­sumers are still helped by rel­a­tively low in­fla­tion and if the Re­serve Bank cuts rates this year, house­holds will get more re­lief. The over­all per­spec­tive on re­tail spend­ing and the strength of the South African con­sumer is likely to change for the better in months ahead given the cur­rent busi­ness mood,” she said.

How­ever, Modise said although one should ex­pect sharp in­creases in tax dur­ing the Bud­get next week, but if the cur­rent en­vi­ron­ment which has lifted the rand since De­cem­ber last year con­tin­ues, con­sumers are likely to be on the safe side.

Ned­bank econ­o­mist Jo­hannes Khosa said although the De­cem­ber growth mod­er­ated, the reality is that the growth rate was stronger than the mar­ket’s fore­cast of 4%.

“The out­look for 2018 has also im­proved. The in­ter­est rate out­look looks more favourable fol­low­ing the re­call of Pres­i­dent Ja­cob Zuma while the firmer rand tra­jec­tory could lead to an early cut in in­ter­est rates de­pend­ing on an­nounce­ments com­ing out of the new ad­min­is­tra­tion, in par­tic­u­lar, the make up of the new Cabi­net,” he said.

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