SA still not spending

Pretoria - Retail sales remained unexpectedly negative in February, according to data released by Statistics SA on Wednesday.

The Pretoria-based agency said retail sales at constant prices came in at -1.5% year-on-year (y/y) in February from a revised contraction of 1.5% y/y in January.

The figure was not expected by most economists who had put February's annual figure at around an increase of 0.5%.

Nedbank economist Carmen Altenkirch said February's retail sales were "very weak".

"Everyone was expecting the figure to turn positive ... this shows that the consumer still remains exceptionally weak."

Altenkirch said while there may have been some buying over the Christmas period, consumers had evidently decided to consolidate their finances further in the months after the festive season.

"While we've seen some job creation, there's been nothing on a scale that would have made up the jobs lost," she added.

While Altenkirch said Nedbank's economic unit was still of the view that rates would remain unchanged, the unexpected February retail sales figure could be one factor that would contribute towards the SA Reserve Bank cutting rates.

Altenkirch said the rand had not been affected by the data.

"It was trading at R7.26 to the dollar this morning and now it's at R7.27," she said.

A turnaround in retail sales could be expected towards the second half of the year.

"Hopefully the World Cup will boost confidence and we are also expecting modest job creation as the year progresses."

She said consumer confidence was a key driver for retail sales.

"They'll turn around as soon as people feel more certain about the outlook for the economy."

While some loosening up of bank lending criteria had been seen, credit numbers were still looking weak.

"People are not willing to take out credit," Altenkirch said.

Asked if the recent upturn in new vehicle sales should have influenced the February figure, Alenkirch said if one looked at the actual volume of car sales, they were coming off an exceptionally low base.

"There may well have been some pent-up demand, or maybe there was buying from car rental companies just before the World Cup," she said.

- Sapa