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Johannesburg - While disappointing August retail sales figures have dashed hopes for a robust second half in 2010, retailers could anticipate a better festive season than that of last year, say analysts.
On Wednesday, Statistics SA said August retail sales grew 4.6% at constant (2008) prices year-on-year after revised 8.0% growth in July, falling far below market expectations.
Investec economist Kgotso Radira said the August numbers indicate that strong growth in June (7.6%) and July were mainly due to the World Cup buying spree.
He said the data highlights the modest pace of recovery, and that growth in the third quarter of 2010 will likely be slower than in the previous two quarters.
"Retail sales for the festive season could likely be slightly better than last year's sales but still below historical trends for the period, as consumers are still overburdened by debt and remain cautious about their spending," said Radira.
Warren Buys, a retail analyst at Cadiz Asset Management, said monthly retail statistics are volatile and cautioned against reading too much into one month's figure.
Rate cut hopes boost
"The trend is that retail sales are recovering but with the current unemployment and debt levels, I think the recovery will be gradual," said Buys.
The retail sector has lagged other sectors in recovery, with many retailers saying they are "cautiously optimistic" about their performance this year. However, retail shares have generally rallied in anticipation of better post-World Cup conditions.
Nedbank economist Isaac Matshego said the momentum loss in August data confirmed that the domestic recovery remains fragile.
He said above-inflation wage increases - particularly in the public sector - low interest rates and subdued inflation will provide some support to retail sales over the coming months.
The weak retail sales figures and manufacturing production numbers, as well as the strong rand, have boosted chances of another repo rate cut.
- Fin24.com
On Wednesday, Statistics SA said August retail sales grew 4.6% at constant (2008) prices year-on-year after revised 8.0% growth in July, falling far below market expectations.
Investec economist Kgotso Radira said the August numbers indicate that strong growth in June (7.6%) and July were mainly due to the World Cup buying spree.
He said the data highlights the modest pace of recovery, and that growth in the third quarter of 2010 will likely be slower than in the previous two quarters.
"Retail sales for the festive season could likely be slightly better than last year's sales but still below historical trends for the period, as consumers are still overburdened by debt and remain cautious about their spending," said Radira.
Warren Buys, a retail analyst at Cadiz Asset Management, said monthly retail statistics are volatile and cautioned against reading too much into one month's figure.
Rate cut hopes boost
"The trend is that retail sales are recovering but with the current unemployment and debt levels, I think the recovery will be gradual," said Buys.
The retail sector has lagged other sectors in recovery, with many retailers saying they are "cautiously optimistic" about their performance this year. However, retail shares have generally rallied in anticipation of better post-World Cup conditions.
Nedbank economist Isaac Matshego said the momentum loss in August data confirmed that the domestic recovery remains fragile.
He said above-inflation wage increases - particularly in the public sector - low interest rates and subdued inflation will provide some support to retail sales over the coming months.
The weak retail sales figures and manufacturing production numbers, as well as the strong rand, have boosted chances of another repo rate cut.
- Fin24.com
