South Africa’s retail sales growth slows in June
(Photo: EPA / Jon Hrusa)
Growth in retail sales volume slowed in June, Statistics South Africa (Stats SA) data showed on Wednesday. This indicates a recovery that remains far from robust, with historically low interest rates failing to encourage hard-pressed consumers to splurge. But at least the sector is not contracting.
On a year-over-year basis, retail trade sales rose 10.4% in June, compared to 16.3% in May and 95.7% in April. These numbers should all be taken with a big pinch of salt. April of last year was the initial and most difficult month of the lockdown, when only groceries and other essentials could be purchased and the economy was in free fall. As 2021 progresses, expect year-over-year growth numbers to slow further.
On a monthly basis, retail sales rose 0.6% from June, a trend which FNB senior economist Siphamandla Mkhwanazi said was “a more meaningful measure under the circumstances and crucial. for the calculation of quarterly GDP growth “. This was also a moderation from May, when 2.3% growth was recorded on a monthly basis after falling 0.5% in April.
“This suggests a seasonally adjusted quarter-over-quarter volume increase of 0.7% in 2Q21, well below the 1.8% q / q increase in 1Q21. The third wave of infections at Covid-19, the end of tax support to vulnerable households and a drop in consumer confidence likely contributed to the deceleration in purchasing activity in 2Q21, ”Mkhwanazi said in a comment on the data.
It also signals that demand pressures in the economy remain flabby, which helps explain the moderation of inflation in July to 4.6% in July from 4.9% in June. Read here.
Speaking of July, this month’s retail numbers are likely to be a train wreck due to the third wave of Covid infections, lockdown restrictions and the wave of looting and riots in Gauteng and KZN.
“Looking ahead, retail sales, the July figure to be precise, are forecast for a bumpy ride. The restrictions, in particular the ban on the sale of alcohol, will severely affect retail sales in the coming months. The recent riots and looting in Gauteng and KwaZulu-Natal will also have a huge impact on retail sales, as stores have been ransacked and many retailers have decided to close their stores for a few days, ”said Pieter du Preez. from NKC African Economics in a note. .
Much of the nearly R 120 million in cash that was stolen from banks and ATMs during the outbreak is likely to be spent and will therefore end up in retailer coffers. But that will hardly compensate for the overall loss in sales volumes. DM / BM