JOHANNESBURG - Retail sales figures released yesterday by Statistics South Africa have surprised economists after data showed the sector registered its biggest gain since August 2012, with the sector set to make a healthy contribution to the third quarter’s gross domestic product (GDP) after sales surged 5.5percent on a yearly basis in August.
On a monthly basis, retail trade increased 2.4percent in August compared to the previous month. Retail trade sales have registered year-on-year gains for the past five months.
The spike in sales in August was driven mostly by a 25percent year-on-year jump in sales by “other retailers”. The general dealer sales expanded by 2.5percent year-on-year in August after a 2.9percent contraction in July.
All categories registered positive growth, with food and beverage retailers up 5.7percent on a yearly basis, pharmaceutical outlets were up 3.6percent, and clothing retailers inched up 2.5percent. Furniture and hardware sales climbed 9percent and 2.7percent, respectively, in the period under review.
However, sales advanced at a slower pace for food, beverages and tobacco in specialised stores, which rose 5.7percent In August compared to 6.5 in the previous month and pharmaceuticals goods and cosmetics, which rose 3.6percent compared to 4.2percent. Jason Muscat, a senior economic analyst at FNB, said yesterday that the August retail trade sales exceeded his expectations of modest growth.
“It’s difficult to pinpoint where the impetus for the surge came from, given still relatively elevated consumer debt levels, high unemployment and muted credit growth. “We expected lower inflation and the July interest rate cut to help, but not to this extent, and suspect that retailers are offering deep discounts which will likely keep margins under pressure,” Muscat said.
The retail sales figures were the third set of positive data to be released this month that showed that the economy has been on a sound footing in the third quarter. Figures released last week showed that the manufacturing and mining sectors also exceeded expectations in August. Mining sector output jumped by 6.9percent on a yearly basis, its fastest growth since March.
At the quarter-on-quarter, seasonally adjusted growth rate that aligns with official gross domestic product growth in the mining and retail sectors was essentially unchanged compared to the second quarter, while manufacturing growth accelerated sharply. StatsSA data last week also said that manufacturing production increased 1.5percent year-on-year in August, better than market expectations of a 0.05percent drop.
John Ashbourne, an Africa economist at Capital Economics, said yesterday that the new figures suggest the economy was already doing better than most had expected.
“This was, admittedly, mostly driven by a 25percent year-on-year jump in sales by 'other retailers', which is unlikely to be sustained. Even so, fears of a slowdown following the strong growth recorded in the second quarter seem to have been misplaced,” Ashbourne said.
Macro-economics statistics website Trading Economics said that retail sales year-on-year in South Africa averaged 4.56percent from 2003 until 2017, reaching a record high of 15.0percent in September 2006 and a record low of -6.4percent in April 2009.