South Africa’s retail sales fell by a less-than-expected 3,7% year-on-year in December, data showed on Wednesday, showing still-weak consumer demand but signs the sector may be on the mend.
Statistics South Africa said the decline in retail sales followed a drop of 6,6% the previous month, bringing the contraction for the last quarter of 2009 to 5,3%, compared with a year ago.
The retail sector has been in decline for 11 months, with households struggling under heavy debt and nearly 900 000 job losses last year when recession hit manufacturing and mining industries particularly hard.
December’s fall was less than forecasts for a 6,1% drop.
“The data indicates that retail sales are improving but it is a fairly gradual recovery because many households are still struggling to pay down their debt,” Citadel economist Salomi Odendaal said.
The data may reduce the need for another interest-rate cut to accelerate the recovery from a recession that officially ended in the third quarter of last year.
“The latest evidence seems to suggest that things are picking up and that there is less need for interest-rates relief, Nedbank chief economist Dennis Dykes said.
“I wouldn’t exclude it, but it suggests that they [central bank] have done enough at this stage and things are starting to pick up naturally.
The South African Reserve Bank has left its repo rate steady at 7% since August last year after reducing it by five percentage points, but Governor Gill Marcus said some members of its policy committee had argued for further relief at January’s meeting, raising speculation of a drop in March.
Consumers were the main drivers of faster growth in the five years until the global crisis crimped growth from 2007 and an extended period of soft consumption could slow South Africa’s recovery. — Reuters