Retail sales continued to improve although they remained in contractionary territory in August as the further easing of the lockdown restrictions during the month spurred shopping activity. African News Agency (ANA)
Retail sales continued to improve although they remained in contractionary territory in August as the further easing of the lockdown restrictions during the month spurred shopping activity. African News Agency (ANA)

Sales in SA improve, but are still in contraction

By Siphelele Dludla Time of article published Oct 15, 2020

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JOHANNESBURG - Retail sales continued to improve although they remained in contractionary territory in August as the further easing of the lockdown restrictions during the month spurred shopping activity.

Statistics South Africa (StatsSA) said yesterday that retail sales fell by a less-than-expected 4.2percent year-on-year in August, compared with the same period last year.

StatsSA said the ease represented a fifth consecutive month of year-on-year decline this year, following a revised 8.6percent year-on-year fall in July, a 7.2percent fall in June, a 11.9percent decline in May, and a 49.9percent tumble in April.

It said all categories fell at a slower pace compared with the previous month, suggesting that the recovery remained intact.

StatsSA said negative annual growth rates were recorded for retailers in textiles, clothing, footwear and leather goods, food, beverages and tobacco in specialised stores, general dealers, and all “other” retailers.

However, the agency said seasonally adjusted retail trade sales increased 4percent on a month-to-month basis compared with July. This followed month-on-month changes of 0.6percent in July and 5.1percent in June.

StatsSA’s deputy director of distributive trade statistics, Raquel Floris, said although the retail industry was showing signs of improvement, it was still struggling to recover from the Covid-19 impact.

“Despite these monthly increases, retail trade remains subdued if we compare with how the industry performed last year,” Floris said. Retail sales have fallen 6.7percent in the three months to the end of August, compared with the same period last year.

FNB senior economist Siphamandla Mkhwanazi said the improvement in month-on-month sales meant that volumes had bounced back to the pre-lockdown levels recorded in February.

Mkhwanazi said that, similar to last month’s print, the resurgence was championed by persistently strong demand for household furniture, as well as hardware material.

“Indeed, mobility trends for places such as supermarkets, food warehouses, farmers markets, specialty food shops and pharmacies have gone back to pre-lockdown levels,” Mkhwanazi said.

“This is driven by a rise in home improvement activity, mainly by high-income households, as well as stronger-than-expected home buying activity by middle-income earners, lending complementary support to furniture demand.”

Investec economists Lara Hodes said retailer confidence levels have increased notably, as the trading environment had improved from levels experienced in the second quarter.

Hodes said, however, that highly constrained consumers, with many facing financial uncertainty, were likely to remain cautious and mindful of their purchases.

“A return to robust levels of activity will likely take some time and retailers are not expecting conditions to improve much further in the fourth quarter, according to the Bureau of Economic Research’s retail survey,” Hodes said.

“We anticipate a protracted recovery in household consumption expenditure and thus South Africa’s economy as a whole.”

BUSINESS REPORT

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