Real re­tail sales in­di­cate an ac­cel­er­at­ing econ­omy

Weekend Argus (Saturday Edition) - - FRONT PAGE - HELMO PREUSS

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.

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