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Retail sales growth surprises

Johannesburg - General expectations were for fairly lacklustre real retail sales growth of less than 3% year-on-year (y/y) in December, according to the SA Council of Shopping Centres (SACSC).

As it turned out, retail sales growth surprised to the upside, recording 3.5% y/y real growth, according to Christo Luüs of Ecoquantm who compiled the information for the SACSC.

Hardware, paint and glass showed particularly buoyant growth of 19.8% y/y, contributing 1.2 percentage points to the overall retail sales growth rate.

Nearly all other categories also showed improvements on a year ago. The exception was household furniture, appliances and equipment, which fell by 13.3% y/y.

Other retailers which experienced above average annual growth rates included textiles, clothing and footwear (5,8% y/y), specialised food, beverages and tobacco retailers (3.8% y/y) and all other retailers (4% y/y).

General dealers (2.3% y/y) and dealers in pharmaceutical, medical goods, cosmetics and toiletries (1.6% y/y) fared worse than average.

Despite the fairly positive retail sales growth number for the final quarter of 2013, the trend in retail sales continued to slow.

From real increases of nearly 8% y/y at the end of 2011, retail sales growth (measured on a 3 month moving average basis) amounted to only 1.6% in October before recovering to 3.1% in the fourth quarter of last year.

For 2013 as a whole, real retail sales grew by 2.8% which was down from 4.7% in 2012 and 6.1% in 2011.

Nominal growth in 2013 was 6.9% y/y, down from 8.9% in 2012 and 9% in 2011.

We expect the lacklustre performance of retail sales growth to continue well into 2014 as disposable income growth slows and interest rates rise.

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