Retail sales on the downside in August, following the unrest and pilfering in July

RETAIL trade sales surprised on the downside in August due to lingering effects of the July unrest, pointing to the unevenness of the recovery in the South African economy in the third quarter.

Data from Statistics South Africa (StatsSA) yesterday showed that retail trade shrank 1.3 percent from a year earlier in August, dragged lower mainly by general dealers and retailers specialising in hardware, paint and glass.

This followed an upwardly revised 1.2 percent fall in July, and defied market estimates of a 2.6 percent rise in August.

This was also the second consecutive decline in retail activity since March, partly due to the lingering effects of recent violent events across the country and the protracted lockdown restrictions.

Nedbank senior economist Nicky Weimar said retail sales surprised on the downside in August, with the effects of the social unrests, lockdown and supply chain disruptions having a more pronounced impact than was generally anticipated.

Weimar said the impact of these events will linger until businesses are restored to full capacity, over the medium term.

“Improvements on the jobs front and the ability to limit restrictions on economic activity will be vital in rebuilding demand,” Weimar said.

“Easier lockdown restrictions and favourable interest rates will offer support to the sector's recovery, particularly as the year-end shopping season approaches.

“However, long-standing structural constraints such as power supply shortages, and the anticipated further waves of Covid-19 infections, will contain the recovery.”