14 November 2012

South Africa: Retail Trade Sales Slow in September

Pretoria — Retail trade sales slowed to 4.3% year-on-year in September, Statistics South Africa (Stats SA) said on Wednesday.

Market expectation was that retail trade sales would slow to 4.7%. In August, retail trade sales rose by 6.4%.

According to Stats SA, general dealers contributed 1.9% while retailers in textiles, clothing, footwear and leather goods were the main contributors to the 4.3% increase.

Seasonally adjusted retail trade sales decreased by 0.5% in September 2012 compared with August's 2.1% increase.

Seasonally adjusted retail trade sales increased by 1.9% in the third quarter of 2012 compared with the previous quarter.

Nedbank economists said that low interest rates, high wage settlements as well as unsecured credit to households should continue to support spending in the final quarter of the year, but that consumers were also likely to be more cautious on spending on non-essential items as debt remained high.

"Consumer confidence is still fragile. As a result, growth in retail sales could moderate in the months ahead," said Nedbank, adding that Growth Domestic Product (GDP) was likely to slow in the third quarter.

Standard Bank in a research note said though the weaker-than-expected retail sales were interest rate positive, year-on-year retail trade sales growth was volatile.

"We would be cautious about reading too much into today's numbers.

"We expect the Monetary Policy Committee to stand still at its meeting next week. However, we believe that the choice facing the committee over the next number of meetings will remain between doing nothing and cutting rates. We don't see the bank taking the prospect of a rate cut off the table as long as the growth outlook remains poor," said Standard Bank.

The MPC will hold its last interest rate meeting from 20 - 22 November.

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