Consumer spend slows ‘drastically’
Retail sales rise of 1% far short of forecasts
MARIAM ISA SOUTH African retail sales grew at the slowest pace in more than two years in April, adding to concern that weakening household consumption would curb growth in the economy this year.
Retail sales edged up by 1% compared to the same month last year, data from Statistics SA showed yesterday. This compared poorly with consensus forecasts for a rise of 4,1%, and was well below that of 6,7% in March.
Retail sales are an important indicator of consumer spending, the economy’s main engine.
“It’s a terrible number. It shows that the consumption side of the economy is slowing quite drastically and the consumer is under stress,” Brait economist Colen Garrow said yesterday.
The dismal figures followed news last week that confidence in the retail sector collapsed during the second quarter of this year, undermined by weaker growth in sales volumes.
“Unfortunately, on a trend basis, there is some evidence to suggest that South African retail activity is facing increasing strain in 2012,” Stanlib economist Kevin Lings said yesterday.
Retail spending power was being eroded by a range of price increases, including energy and transport costs, education fees, medical expenses and water tariffs, he said.
Sales for retailers of household furniture, appliances and equipment fell by 4,2% year on year. Sales for retailers of food, beverages and tobacco fell by 3%, while growth was virtually flat in sales by general dealers, which have the biggest weight in the measure.
The figures suggest that growth in the economy may slow more sharply than expected this year, even if the pace of private sector investment picks up — which is unlikely as two recent business confidence indices were significantly weaker.
Some analysts said the sluggish
among others, Unilever, the world’s third-largest consumer goods company; the UK’s thirdlargest supermarket chain, Sainsbury’s; the largest US grocery retailer, Walmart; and its sixthlargest retailer, Costco.
A World Wide Fund for Nature independent review of eco labels to determine the extent to which they met the United Nations Food and Agricultural Organisation’s sustainability requirements showed that the MSC label was “the only one that came close”, with a 97% score, said the fund’s sustainable fisheries manager, Samantha Petersen.
Shaheen Moolla, MD of Feike Natural Resource Management Advisers in Cape Town, said discarding the lucrative European market was misinformed.
“You don’t decide on Friday that you will shift the market. Market development takes decades; and you won’t earn as much in the East as in Europe. The first thing to go will be jobs,” Mr Moolla said yesterday.
Tim Reddell, chairman of Fish SA, an umbrella body of fisheries associations, said it had taken 10 years to get MSC accreditation.
He said SA had missed sending out scientists on another observer cruise, to determine the sustainability of pilchard and anchovy stocks, and “as these things fall by the wayside, it will be more and more difficult to hang on to accreditation”.
Mr Moolla said the collapse of the long-line hake fishery, which is not MSC-accredited, was linked to industry players being forced to sell to “other markets” a decade ago as European consumers demanded MSC accreditation.
MSC southern Africa programme manager Martin Purvess said a report expected on July 9 would give clarity on steps SA had to take to retain accreditation.