December retail sales at 2.3%

Feb 13 2013 14:13

Johannesburg - Growth in South Africa's retail sales slowed to 2.3% year-on-year in December from a revised 3.6% in November.

Economists had expected subdued sales over the month, with growth forecast at 1.2%.

On a month-on-basis basis, Stats SA said sales were up 1% in December, and increased by 2.3% in the last quarter of 2012 compared with the same period a year ago.

Anisha Arora, analyst at 4Cast said: "The importance of retail sales reflects the health of households' consumption and expenditure, so with the release showing that seasonally adjusted retail trade was down by 0.2% quarter-on-quarter in Q4, South Africa will again be relying on government spending and fixed investment to sustain positive GDP growth.

"We don't expect the retail figures will ease the environment for the MPC to cut rates, especially when inflation risks are somewhat on the upside with the new basket weightings coming into effect from next week's January CPI data."

Peter Attard Montalto, economist at Nomura said: "This number continues to indicate that there was some underlying strength into the end of the year in the economy though much of this is probably credit-supported.

"We are also seeing the impacts of a strong wage round with large real wage increases - before the story of 2013 hits, which will be falls in employment, in farming and mining in particular.

"This number has no effect on our view of rates on hold this year. This last piece of Q4 data puts our GDP bean count estimate at 2.1%-2.2% year-on-year."

Slowing growth in sales adds to signs that fourth quarter economic growth should be weak.  

Retail sales averaged 5.9% last year, compared with 5.1% in 2010. Analysts expect sales growth to slow further this year as higher fuel and food costs curb non-essential spending.

Consumer spending underpinned economic growth in the last half of 2011 as demand sectors grew.

Statistics South Africa has drawn recent months' data from a fresh 2012 sample, replacing the previous year's sample.

The rand firmed to R8.8970 against the dollar by 11:28 GMT from R8.9150 before the data was released at 11:00 GMT. 

The yield on the 2026 benchmark bond rose to 7.30% from 7.275% prior to the release while that for the shorter-dated 2015 issue climbed 1.5 basis points to 5.34%.

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