Retail shows a speeding economy

THE September consumer inflation and August retail data release on Wednesday will dominate the data calendar next week, but there are several other data releases on Thursday that will help inform the public about the state of the economy.

Consumer inflation rose to 4.8% year-on-year (y/y) in August from 4.6% y/y in July largely due to a swing in petrol prices from a y/y decline in July to a y/y increase in August. This is despite a further easing in food inflation, which slipped to 5.7% y/y in August from 6.8% y/y in July after being steady at 7% y/y in June and May.

Real retail sales should show an accelerating economy.

In July real retail trade sales growth eased to 1.8% y/y from a revised 3.2% (2.9%) y/y in June.

The easing was concentrated in supermarkets, which is the largest single sector, with a 3.2% y/y fall in July after a 1.6% y/y rise in June, but there should be a return to a y/y increase in August given the rise in real disposable incomes as reflected in the BankservAfrica Disposable Salary Index.

This index will also be y/y increases in new and used car sales. The number of civil summonses for debt and the subsequent judgments for debt has been on a declining trend since 2013, as banks curtail their unsecured lending, while consumers have become more circumspect in their use of credit to buys goods.

In July the number of summonses fell by 18.2% y/y, while the number of judgments dropped by 12.5% y/y and this trend of y/y decreases should have continued in August.

The other major data release is building plans. That has two components, namely building plans passed by the larger municipalities and building plans completed.

The former is a leading indicator as it shows what building activity is likely to result, while the latter is a coincident or lagging indicator as it shows what has been built.

Please bear in mind that it takes around six months to build a house and around two years to build a major non-residential building such as a shopping mall or office complex.

Building plans passed have been impacted by the drop in business confidence, so the real value of non-residential plans passed has plunged by 27% y/y in the first seven months of this year.