Maroc - dailynews.co.za - Business - 14/Aug 16:19

Retail sales surge to 2-year high, boosting Q2 GDP growth outlook

SHOPPING activity has given a significant boost to the second quarter’s economic growth in South Africa as retail trade sales surged to a near 2-year high in June, mainly driven by textiles and clothing.Data from Statistics SA (Stats SA) yesterday showed that retail sales increased by 4.1% year-on-year in June following an upwardly revised 1.1% rise in May.This marked the fourth consecutive month of increases in retail activity, with the growth rate at its strongest since July 2022.This also means that the economy stands to avoid entering a technical recession in the second quarter as real gross domestic product (GDP) growth experienced a 0.1% contraction in the first quarter.Stats SA’s deputy director for distributive trade statistics, Raquel Floris, said the general dealers retail group, which includes supermarkets, was the largest positive contributor, rising by 7.3% year-on-year.“Other retailers that recorded a positive month include textiles and clothing stores and retailers specialising in household goods. Year-on-year growth was flat for retailers in pharmaceuticals, medical goods and cosmetics.“On the downside, food and beverages, hardware, paint and glass, and the miscellaneous group referred to as all other retailers, registered a weaker month.”On a monthly basis, seasonally adjusted retail trade sales increased by 1.6% in June compared with May, representing the largest monthly rise since January 2023 when sales increased by 2.7%.Dr Elna Moolman, Standard Bank Group head of SA macroeconomic research, said the retail sales data was stronger in June than the consensus expected, and this was true both in nominal terms once the impact of price changes is stripped out.“In the second quarter of the year we now have a positive growth of one-and-a-half percent which would support the GDP recovery that we foresee in the second quarter. This of course follows a contraction in the first quarter of the year when retail sales declined by 0.3%,” Moolman said.“We still think that the second half of the year will be better from a consumer perspective partly because we see a further decline in inflation and partly because we expect some interest rate relief from the Reserve Bank.”On a quarterly basis, seasonally adjusted retail trade sales increased by 1.5% in the second quarter of 2024 compared with the first quarter of 2024.Retail trade sales increased by 2,0% in the second quarter of 2024 compared with the second quarter of 2023FNB senior economist Siphamandla Mkhwanazi said retail sales were up by 0.9% year-to-date compared to the same period last year.Mkhwananzi said data suggested that these gains had all come from the last three months. “This coincides with load shedding cessation since March, a substantial petrol price cut in June, as well as the post-election improvement in sentiment,” Mkhwanazi said.“While June figures are encouraging, the broader consumer environment remains challenging due to high living costs and unemployment, as well as tight credit conditions. The upcoming two-pot pension system is expected to have a limited impact on consumer spending, given concerns about rising debt distress.“However, there is potential for an improved consumer backdrop in the medium term as inflation eases and interest rates gradually decline.”BUSINESS REPORT