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Johannesburg - Today's retail sales data for June is
expected to be subdued, but to at least measure an improvement from the decidedly poor ?3.6% registered in May.
Analysts say the retail sector is currently suffering far more stress than manufacturing, as interest rate hikes bite and consumers do what they can to smooth their consumption across the cycle with extra credit.
Global analysts Lehman Brothers expect a modest -0.3% year-on-year (y/y) fall overall for June, which they do not see upsetting the GDP applecart too much.
Growth in retail sales declined significantly in May to reach -3.6% from -0.1% in April, thus reaching the lowest growth rate since the starting date of the Stats SA data series, namely January 2002.
The continual decline in retail sales growth can be largely attributed to slower consumer spending growth.
The worse-than-expected figures indicate that the combination of the 500 basis point rise in interest rates since June 2006 and over-indebtedness among consumers, combined with sharp increases in petrol and food prices over the past year, has begun to hamper the ability of consumers to spend quite significantly.
Subdued growth
In addition, a sharp rise in retail inflation also dampened the growth of consumer spending, while the fact that May had an extra holiday (compared to last year) exacerbated pressures faced by retailers.
Retail sales growth is expected to have remained subdued in June given that interest rates were increased further in June by 50 basis points and the petrol price increased by a large 50c per litre during the month, placing further pressure on consumers' disposable income.
Real growth of around 0.7% is expected by an independent analyst spoken to by I-Net Bridge for 2008, which would be markedly down on 2007's 5.1%.
However, real wage growth is expected to accelerate next year in the face of larger wage increases, and combined with possibly lower expected inflation for 2009, this is likely to provide some impetus next year to a turnaround in the declining growth of retail sales.
For 2009 as a whole, the independent analyst anticipates growth in retail sales to average around 3.6%.
- I-Net Bridge