South Africa’s real retail sales surged by 2,9% m/m (40,9% annualised) in May after seasonal adjustment, Statistics South Africa said on Wednesday.
This brought the y/y change to 3,6% from only 2,2% in April. Real retail sales had been weak in the first four months of this year in a belated reaction to the four interest rate hikes last year. The y/y growth rate peaked at 8,4% y/y in May 2002.
The May sales may have anticipated the 150 basis points cut in interest rates in mid-June, which was the first cut in South African interest rates since September 2001.
The May data was also the third time this year that there has been monthly deflation or no inflation at the retail level, as current price data only showed a 2,5% monthly increase.
Retail sales are likely to have increased further in subsequent months if the behaviour of new car sales is anything to go by.
“New car sales are a leading indicator for domestic demand,” Rejane Woodroffe, the economist at Metropolitan Asset Managers said.
South African July new car sales of 22 988 units reflected a gain of 8,6% y/y compared with June’s 4,7% y/y increase and May’s 8,9% y/y decline, which may herald a revival in South African consumer demand. July new car sales were a substantial 32,3% higher than May’s. July new car sales were the highest monthly total since November 1996.
Last year, consumer durable purchases for private consumption only rose by a real 1,7% compared with an overall gross domestic product (GDP) growth rate of 3,0%.
Real retail trade sales (at constant 1995 prices) for the first five months of 2003 increased by 3,0% compared with the first five months of 2002.
Fourteen of the nineteen merchandise categories reflected increases in real retail trade sales (at constant 1995 prices) for the first five months of 2003 compared with the first five months of 2002.
The largest percentage increase was reported for ‘other’ merchandise (+12,0%), followed by increases reported for glass, crockery, cutlery and kitchenware (+11,4%), inedible groceries (+6,8%) and footwear for men, ladies and children (+6,1%).
These increases were partially counteracted by decreases reported for jewellery, silverware, watches and precious stones (-11,3%), other domestic furnishings (-3,5%), pharmaceuticals, patents and other medicines, bandages, cosmetics and toiletries (-1,3%) and ladies’, girls’ and infants’ clothing and accessories (-1,0%).
Cash sales comprised 78,2% of total sales for May 2003. This is 0,6 of a percentage point higher than the 77,6% for May 2002, but below the 78,8% recorded in April.
Hire purchases as a percentage of total sales increased by 0,4 of a percentage point (from 8,4% to 8,8%), while other credit sales as a percentage of total sales decreased by 1,0 percentage point (from 14,0% to 13,0%) during this period. ‒ I-Net Bridge