JOHANNESBURG - Retail sales for December 2018 contracted by 1.4% year on year,  from a downwardly revised 2.9%  year on year in November (previously 3.1%).  

This outcome negatively surprised relative our expectation of a mild uptick and the outcome marked the first contraction in retail sales since February 2017. 

The weak performance was on the back of subdued sales by dealers in the textiles, clothing, footwear and leather goods (-2,7% and contributing -0,6 of a percentage point); and general dealers (-1,0% and contributing -0,4 of a percentage point) sectors. The December print takes annual sales volume growth for 2018 to 2.1% above 2017 levels.

The seasonally adjusted retail trade sales show the extent to which sales volumes underperformed in December 2018, registering a decline of 4,8% compared with November 2018. 

This was partly due to a high base established in November, as consumers took advantage of Black Friday and Cyber Monday deals. 

Siphamandla Mkhwanazi, FNB economist, said, "Despite the weak December print we expect a moderate positive contribution to the fourth quarter GDP. Looking ahead, we expect the combination of a sharp decline in the December and January petrol price and the gradually increasing credit take up by consumers (particularly unsecured credit) to support retail sales in the coming months."