[ad_1]
Retail sales in South Africa have recorded another year-on-year decline for June 2023, with retailers expected to have a tough couple of months ahead.
According to Stats SA, retail sales volumes dropped by 0.9% year-on-year in June.
This is, however, a slight improvement from the 1.6% seen in May (revised downwards from -1.4%).
Siphamandla Mkhwanazi, FNB Senior Economist, said that the outcome was worse than the Reuters consensus expectation of -0.2% and is the seventh consecutive month of annual decline in sales volumes.
However, on a month-to-month basis, seasonally adjusted volumes recovered by 0.2% after a 0.9% month-on-month decline in May (revised lower from -0.7%).
“The marginal lift was likely supported by the unexpected load-shedding reprieve and the near R1 fuel price relief in June,” Mkhwanazi said.
“Nevertheless, volumes contracted by 1% compared to the previous quarter, signifying that the retail industry will detract from 2Q23 GDP growth, in contrast to the energy-intensive mining and manufacturing sectors, that will likely contribute positively to growth in that quarter.”
“This underscores the challenging consumer backdrop, characterised by high debt and living costs, as well as suppressed consumer sentiment.”
Per industry
Five of the seven categories measured by Stats SA saw an annual decline in volumes, with the biggest decline seen amongst General dealers (-2.7% year-on-year, contributing -1.2ppts)
Hardware material (-4.4% year-on-year, -0.4ppts), Other retailers (-1.6% year-on-year), Household furniture (-1.5% year-on-year) and Pharmaceutical retailers (-1.4% year-on-year) also saw declines.
On the other hand, Clothing and footwear retailers (5.8% year-on-year) and Food and beverages retailers (1.0% year-on-year) both saw growth.
Outlook
“Credit data suggests that consumers are still accumulating consumption credit at a relatively faster pace, though the trend has plateaued in the last few months,” Mkhwanazi said.
“National Credit Regulator data further reveals a strong increase in the issuance of store and credit cards in non-bank sectors- both geared towards consumption.”
That said, FNB expects lending standards to tighten as the effect of past interest rate decisions filters through and limits shopping activity.
Mkhwanazi added that this, on top of declining consumer confidence, indicates that there will be suppressed growth in household consumption expenditure.
Read: A bright turn for South Africa – with a catch
[ad_2]
Source link