Robust sales give the retail sector a boost

RETAIL sales statistics released yesterday showed the sector expanded 5.4 percent in September, above market expectations of 4.5 percent.

On a monthly basis, retail trade decreased 0.7 percent in September compared with the previous month.

The September figure, which was a last for the third quarter showed retail sales increased 1.4 percent in the quarter following a 2 percent rise in the second quarter.

Jason Muscat, a senior economic analyst at FNB, said the recent robustness of retail sales were an indication of the pent-up demand in the domestic economy, which has been aided by a benign inflation backdrop and a 25 basis points interest rate cut

“We suspect that significant retailer discounting has been an additional tailwind. Should a local currency credit rating downgrade be triggered before the first half of next year, the sector’s momentum will almost certainly be derailed on even lower consumer and business confidence,” Muscat said.

Sales in the sector grew at a faster pace for general dealers, rising 3.4 percent in September compared to 2 percent in August and textiles, clothing, footwear and leather goods surged 8.6 percent compared with 1.8 percent in the prior month.

Sales advanced at a slower pace for all other retailers, which registered an increase of 19.4 percent in September compared with 27.2 percent in the previous month. Food, beverages and tobacco in specialised stores bounced 5 percent in the month compared with 5.5 percent in August.