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Johannesburg - Retail business confidence improved during the third quarter of 2010, but the recovery remained hesitant, the Bureau for Economic Research (BER) said on Thursday.
Business confidence amongst retailers increased by 14 index points - from 38 to 52 - during the third quarter of 2010.
"This means that the index almost reversed all the losses of the second quarter of 2010," the BER said.
However, the survey produced mixed results.
"On balance, the results indicate that the recovery in the retail sector remained on track, although areas of weakness persisted."
According to Statistics SA, the volume of retail sales had increased by 4.9% year-on-year during the second quarter.
However, the BER's retail trade survey indicated that the growth in sales subsided during the third quarter of 2010.
"A net majority of 13% of respondents indicated that sales volumes were lower than a year ago."
A lack of pricing power put further pressure on retailers.
"A net majority of 16% of respondents indicated lower rates of increase in average selling prices."
BER economist Craig Lemboe said these lower rates of increase in selling prices together with the lower growth in sales volume adversely affected retailers' overall profitability.
"Whereas the semi-durable goods sector (mainly clothing, footwear and textiles) performed impressively during the third quarter of 2010, the non-durables (food and groceries, beverages, pharmaceuticals and toiletries) and durables (furniture, household equipment, electronic goods, hardware and jewellery) sectors weakened unexpectedly."
Lemboe said non-durable and durable goods traders indicated that the growth in sales volumes and the pace of average selling price increases was much slower than anticipated in the second quarter of 2010.
"Also during the third quarter of 2010, wholesale trader confidence returned to the first quarter 2010 level, increasing by three index points to 50."
The rise in business confidence was mainly driven by the consumer goods sub-sector which included goods such as textiles and clothing, footwear, food, beverages and tobacco, household requisites and pharmaceuticals.
During the third quarter of 2010, business confidence amongst new vehicle traders surged by 30 index points to 79.
"The performance of new vehicle sales during the third quarter far exceeded expectations and this to a large degree explains the steep rise in business confidence," Lemboe said.
The fieldwork for the survey was conducted from August 2 to 30 amongst the BER's regular panel of respondents.
Business confidence amongst retailers increased by 14 index points - from 38 to 52 - during the third quarter of 2010.
"This means that the index almost reversed all the losses of the second quarter of 2010," the BER said.
However, the survey produced mixed results.
"On balance, the results indicate that the recovery in the retail sector remained on track, although areas of weakness persisted."
According to Statistics SA, the volume of retail sales had increased by 4.9% year-on-year during the second quarter.
However, the BER's retail trade survey indicated that the growth in sales subsided during the third quarter of 2010.
"A net majority of 13% of respondents indicated that sales volumes were lower than a year ago."
A lack of pricing power put further pressure on retailers.
"A net majority of 16% of respondents indicated lower rates of increase in average selling prices."
BER economist Craig Lemboe said these lower rates of increase in selling prices together with the lower growth in sales volume adversely affected retailers' overall profitability.
"Whereas the semi-durable goods sector (mainly clothing, footwear and textiles) performed impressively during the third quarter of 2010, the non-durables (food and groceries, beverages, pharmaceuticals and toiletries) and durables (furniture, household equipment, electronic goods, hardware and jewellery) sectors weakened unexpectedly."
Lemboe said non-durable and durable goods traders indicated that the growth in sales volumes and the pace of average selling price increases was much slower than anticipated in the second quarter of 2010.
"Also during the third quarter of 2010, wholesale trader confidence returned to the first quarter 2010 level, increasing by three index points to 50."
The rise in business confidence was mainly driven by the consumer goods sub-sector which included goods such as textiles and clothing, footwear, food, beverages and tobacco, household requisites and pharmaceuticals.
During the third quarter of 2010, business confidence amongst new vehicle traders surged by 30 index points to 79.
"The performance of new vehicle sales during the third quarter far exceeded expectations and this to a large degree explains the steep rise in business confidence," Lemboe said.
The fieldwork for the survey was conducted from August 2 to 30 amongst the BER's regular panel of respondents.
