South Africa’s festive season retail sales in the fourth quarter, which covers the Christian Christmas season, as well as the Hindu Diwali festival, the Muslim Eid festival and the Jewish Hanukkah festival, is expected to be the best in at least 20 years, according to the Ernst & Young festive season retail trends survey.
The survey was conducted among 500 retailers by the bureau for economic research at the University of Stellenbosch.
Retail sales are expected to grow by 17,4% year-on-year (y/y) compared with 10,2% y/y in the festive season of 2003, which reflects volume growth of 11,7% y/y compared with 8% y/y last year.
Statistics South Africa reported that real retail sales rose by 10,7% y/y in August after 11,1% y/y in July and a 9,2% y/y increase in June.
This was only the fourth time this year that the y/y increase has been in double digits after a 10,6% y/y rise in January and an 11,3% y/y increase in February. The original July 2004 increase of 11,7% was a y/y record high for the current time series, which started in January 1998.
Real retail sales rose by 8,9% y/y in the second quarter 2004 and by 12,7% y/y in nominal terms, which brought real sales growth for the first half of 2004 to 9,1% y/y and 12,5% y/y in nominal terms. Stats SA had previously said that real retail sales grew by 5,7% in 2003 compared with 2002’s 4,5% increase, but the new series now estimate that real retail sales grew by 4,9% in 2003 from 2,3% in 2002.
The South African Reserve Bank (SARB) implemented a 150 basis points cut in interest rates in mid-June 2003, which was the first cut in South African interest rates since September 2001.
There was a further 100 basis points cut in mid-August, another 100 basis points cut in mid-September, a 150 basis points cut in October and a 50 basis points cut in mid-December. This year the SARB has so far cut rates by 50 basis points in August.
Wholesale trade sales, at constant (2000) prices for the first half of 2004 increased by 7,2% y/y, while the nominal increase was 7,9% y/y to give a wholesale inflation rate of a tiny 0,7% y/y.
On August 30, Stats SA said that internal trade, which covers the wholesale and retail trade, hotels and restaurants sectors, only grew by 4,2% quarter-on-quarter at a seasonally adjusted annualised rate in the second quarter and by 4% y/y.
Most economists say that estimate does not correspond to the double-digit growth reported by most retailers and are anxiously awaiting the new gross domestic product data due at the end of November, when the base date moves from 1995 to 2000.
In May, Stats SA said that the new business register used to compile the revamped wholesale and retail trade data showed that last year’s nominal sales in the retail sector had been under-reported by 17%.
Real wholesale trade sales, excluding diamonds, in South Africa surged by a record y/y increase of 18,1% in August after rising by 10,6% y/y in July after a 16,7% y/y increase in June, according to Statistics South Africa data. ‒ I-Net Bridge