Real retail sales indicate an accelerating economy
THE September retail data on Wednesday will be the key data release next week, but there are several other data releases that will help inform the public about the state of the economy.
In line with data released this week such as the manufacturing and mining production data for the third quarter, real retail sales on Wednesday should show an accelerating economy.
Real retail trade sales surged by 5.5% year-on-year (y/y) in August, more than double the consensus forecast of 2.3% y/y, after a 1.6% y/y gain in July.
As evidenced from other data releases, August was the month in which the logjam on economic activity was removed.
Some pullback is expected in the September retail sales data, but overall there should be a positive contribution to third quarter gross domestic product (GDP) growth.
The reason why retail (and other trade such as wholesale trade and motor trade) is so important will be revealed in the 2016 Annual Financial Statistics on Wednesday.
In the second quarter of this year, trade accounted for 36% of total turnover of non-farm formal businesses, followed by 27% for manufacturing, 12% for business services, 9% for transport and communications, 6% for mining and 5% for construction.
The South African business the motor trade sales report on the value of new vehicles sold as well as the value of used vehicles sold, fuel sales, convenience store sales, sales of spares and workshop income.
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 buy goods.
In August the number of summonses fell by 12.7% y/y, while the number of judgments dropped by 8.0% y/y and this trend of y/y decreases should have continued in September.
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 19.5% y/y in the first eight months of this year.