Retail data adds to first-quarter bad news
Retail sales in the period were hit by load shedding and subdued trading as consumers remained under pressure amid weak economic growth, analysts said.
Data from Statistics South Africa showed that retail sales registered a pedestrian growth of just 0.2percent year-on-year in March, with sales for food and beverages as well as pharmaceutical retailers the hardest hit.
Only furniture and appliance retailers, general dealers and other retailers saw growth in sales in the period.
Capital Economics economist John Ashbourne said the retail figures added to the evidence that the economy had performed poorly in the first quarter activity with mining, manufacturing and retail sectors all falling over in the first three months of the year.
“Our gross domestic product (GDP) tracker suggests that overall output probably dropped by about 2percent quarter-on-quarter. This would follow growth of 1.4percent in the fourth. This would be the worst performance since the first quarter of 2018. And it would underline the scale of the economic challenges faced by President Cyril Ramaphosa,” Ashbourne said.
Mining production shrank 3.4percent quarter-on-quarter during the first quarter of 2019 compared to the fourth quarter, while manufacturing production data fell at a seasonally adjusted 2.4 percent.
Other indicators that point to the state of the economy also came in negative with the unemployment rate having increased from 27.1percent in the fourth quarter to 27.6percent in the quarter under review.
South Africa’s economy has not grown above 2percent since 2013, meaning it will be hard to achieve National Treasury’s growth projection of 1.5percent this year.
Investec economist Lara Hodes said retail sales continued to reflect a subdued consumer demand undermined by weak economic growth.
“On a quarter-on-quarter seasonally adjusted annualised basis, which is the measure used to calculate headline GDP growth, retail trade sales were down 2.9percent in March, indicating that the sector will again detract from top line GDP, this time in the first quarter,” Hodes said.
First quarter’s subdued retail sales mirrored the FNB and the University of Stellenbosch’s Bureau for Economic Research measurement of consumer confidence, which recorded its lowest level in the first three months of this year since the last quarter of 2017.
The index showed consumer sentiment dropped from 7 index points in the fourth quarter to 2 index points in the first quarter.
FNB economist Siphamandla Mkhwanazi said the muted retail numbers could be attributed to severe load-shedding in March, which resulted in a loss of tradeable hours.
First quarter GDP data is expected to be released next month.