CONSUMERS used the relaxation of Covid-19 lockdown restrictions to return to shops as retail sales rose more than expected in May after two consecutive months of declining
Data from Statistics South Africa (StatsSA) yesterday showed that retail trade sales rose by 15.8 percent in May compared to the same month a year ago. This followed a revised record 95.7 percent jump in April, beating market expectations of a 12.2 percent increase.
Nedbank senior economist Nicky Weimar said the retail sector benefited from looser lockdown restrictions in May, starkly in the green by all measures. Weimar said consumer spending patterns had switched, however, from non-durables toward more online shopping and groceries items.
“This suggests somewhat of a normalisation which was probably supported by improved job prospects and confidence,” Weimar said.
“While the outlook for the sector was bright, the recent surge in Covid-19 infections and associated lockdowns, the current social unrest and the slowdown in vaccinations will significantly contain the pace of recovery.
StatsSA said the largest annual growth rates were recorded for all “other” retailers, retailers in food, beverages and tobacco in specialised stores, and retailers in household furniture, appliances and equipment.
On a monthly basis, StatsSA said retail sales advanced 2.1 percent after two consecutive months of declining.
FNB economist Siphamandla Mkhwanazi said the May retail sales were helped by base effects, and the monthly momentum was encouraging. He said that near-term retail sales should continue depicting abnormally large year-on-year growth swings due to last year’s base effects, although at a diminished rate.
“Fundamentally, however, rising Covid-19 infections and the subsequent implementation of harsher lockdown restrictions could subdue retail sales performance,” Mkhwanazi said. “This will be exacerbated by the recent riots in some parts of the country that have caused damage to retail property, stock and supply chain networks.
Souring consumer sentiment and the slow re-adjustments in the labour market have been cited to pose a downside risk to consumption expenditure in the medium-term.
However, Anchor Capital’s Casey Delport said risks remained titled to the downside.
Delport said June may still lead to a positive performance in the retail sector, however the outlook from thereon out looked shakier.
“The end of June notably saw the introduction of the level 4 lockdown restrictions because of the resurgence of the third wave of the pandemic,” she said.
“The economic costs of the current riots are, at this point, impossible to quantify but are sure to have a severe detrimental impact on the entire sector.”
BUSINESS REPORT