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Johannesburg - Declining retail sales figures have confirmed that SA's consumers are buckling under the weight of the recession despite interest rate cuts, said economists.
On Wednesday, Statistics SA reported retail trade sales at constant prices were down 6.7% in June, compared to the same month in 2008. For the whole second quarter, sales were down 6% compared to 2008. June sales lagged those of May by 2.7%.
Brait chief economist Colen Garrow said: "The numbers are not good, but the market has been expecting a contraction."
Liberty Group consumer economist Tendani Mantshimuli agreed, saying consumers' disposable income remains under pressure, despite recent interest rate cuts.
"Consumer debt to disposable income remains very high, while disposable income is declining in line with the weak economy," said Mantshimuli.
The main contributors to the decrease were hardware, paint and glass.
"Activity in this sector will not improve quickly as long as residential construction remains under pressure," said Mantshimuli.
According to Mantshimuli, consumers are still feeling the lagged effects of last year's high interest rates. However, the full impact of recent cuts will be coming through during the next few months, which should support increased spending.
Garrow said the retail data, coupled with Tuesday's manufacturing figures which showed a 17.1% drop, may prompt the Reserve Bank to cut interest rates by 50 basis points on Thursday.
- Fin24.com