November retail sales slide further

Growth in retail sales fell further in November, Statistics South Africa said on Wednesday, indicating continued strain in consumption activity.

For November 2008 retail sales decreased by 4% compared with November 2007, the Pretoria-based agency added.

In August and September, growth in annual retail sales declined by 5,6% year-on-year and was followed by a revised 2,2% year-on-year decline in October.

The figure for November was expected and confirmed economists’ views that the retail sector was clearly in recession.

According to Standard Bank economist Johan Botha, this was the seventh consecutive month of declining sales.

”The outlook for the sector remains poor over the short to medium term given the generally weak economic and financial environment,” Botha said.

He added that while December data might brighten the picture somewhat, it was ”unlikely to signal a reversal in fortunes for the sector”.

Retail sales would remain under pressure ”until such time that underlying drivers, such as disposable income, inflation and interest rates improve”.

Botha said this might only happen towards the middle of the year.

November’s figure also justified the South African Reserve Bank’s rate cut in December of 50 basis points and made a case for another rate cut at the bank’s Monetary Policy Committee meeting next month. — Sapa

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