Tills ring out as re­tail sales rise 1.7%

The Star Early Edition - - COMPANIES - Sizwe Dlamini

SOUTH Africa’s re­tail sales rose 1.7 per­cent year-on-year in May, boosted by food, bev­er­ages and tobacco pur­chases against pre­dic­tions of a 0.3 per­cent de­cline.

Statis­tics South Africa (Stats SA) yes­ter­day said the rise fol­lowed an up­wardly re­vised 2 per­cent gain in April.

The agency said food, bev­er­ages and tobacco in spe­cialised stores sales shot up 14.5 per­cent from 11.1 per­cent in April.

It said phar­ma­ceu­ti­cals and med­i­cal goods, cos­met­ics and toi­letries also surged 0.5 per­cent com­pared with 0.2 per­cent in April while sales in all “other” re­tail­ers added 3.2 per­cent from -5.1 per­cent last month.

But Stats SA said hard­ware, paint and glass fell 4 per­cent from 2.9 per­cent and gen­eral deal­ers fell 0.2 per­cent com­pared with 6 per­cent in April.

In­vestec econ­o­mist Kamilla Ka­plan said the per­for­mance was an ex­ten­sion of sales dy­nam­ics in the year to date, cit­ing the con­trast seen in gen­eral deal­ers and sales in the semi-durable goods and durable goods cat­e­gories, which un­der­per­formed com­pared with the same pe­riod last year.

“This would sug­gest that con­sumers are di­vert­ing spend­ing away from the more dis­cre­tionary (non-es­sen­tial) items, as con­sumer con­fi­dence re­mains de­pressed, real dis­pos­able in­come growth has con­tracted and credit ex­ten­sion to house­holds is neg­a­tive in real terms,” she said.

Stats SA re­ported that sea­son­ally ad­justed re­tail trade sales in­creased 0.9 per­cent month-on-month in May fol­low­ing 0.7 per­cent in April and 0.5 per­cent in March.

In May, the three-month rolling sea­son­ally ad­justed mea­sure rose to 1.6 per­cent from 0.1 per­cent.

Ka­plan said the sec­tor was on track to make a pos­i­tive con­tri­bu­tion to sec­ond-quar­ter GDP, af­ter hav­ing de­tracted from first-quar­ter GDP.

Re­tail sales in the three months to May in­creased 1.5 per­cent com­pared with the three months to May last year.

Cap­i­tal Eco­nomics’ Africa econ­o­mist John Ash­bourne said the surge sug­gested that the re­cent run of weaker quar­ter-on-quar­ter re­tail sales growth fig­ures was largely the re­sult of dis­rup­tions caused by the in­creased pop­u­lar­ity of “Black Fri­day” sales of­fers.

“These pushed up spend­ing in Novem­ber, and then de­pressed it in the fol­low­ing months,” he said.

“May was the first month in which Novem­ber did not fea­ture in the quar­ter-on-quar­ter com­par­i­son.”

Eco­nomic data web­site Trad­ing Eco­nomics said the coun­try’s year-on-year re­tail sales av­er­aged 4.58 per­cent from 2003 un­til this year, reach­ing an all-time high of 15.5 per­cent in Septem­ber 2006 and a record low of -6.40 per­cent in April of 2009.

NKC Re­search an­a­lyst El­ize Kruger said the im­prove­ment in re­tail sales was more broad­based, with five of the seven cat­e­gories con­tribut­ing pos­i­tively to growth as op­posed to only sales of es­sen­tial goods.

“With data for two months of (this year’s sec­ond quar­ter) now known, it seems that the sec­tor would be a pos­i­tive con­trib­u­tor to (the sec­ond quar­ter’s) real GDP growth, which pro­vides a good in­di­ca­tion that over­all GDP growth could likely be back in pos­i­tive ter­ri­tory,” she said.

Part­ner and man­ag­ing di­rec­tor at Bos­ton Con­sult­ing Group, Ste­fan Salzer, be­lieves the re­tail in­dus­try as a whole is un­der pres­sure from the re­ces­sion. Salzer said con­sumers, as well as re­tail com­pa­nies, would con­tinue to ex­pe­ri­ence chal­lenges over the course of this year.

PHOTO: REUTERS

Food, bev­er­age and tobacco gave re­tail sales a wel­come boost in May.

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