Retail trade sales increased by 1.8% year-on-year in July 2017, Statistics SA announced on Wednesday.
This is as measured in real terms - at constant 2012 prices.
The highest annual growth rates were recorded for all "other" retailers (12.4%), followed by retailers in food, beverages and tobacco in specialised stores (7.1%) and retailers in household furniture, appliances and equipment (6.8%).
Seasonally adjusted retail trade sales decreased by 0.6% month-on-month (m/m) in July 2017. This followed m/m changes of 0.6% in June 2017 and 0.9% in May 2017.
In the three months ended July 2017, seasonally adjusted retail trade sales increased by 1.5% compared with the previous three months.
Retail trade sales increased by 2.1% in the three months ended July 2017 compared with the three months ended July 2016.
The main contributors to this increase were all "other" retailers (10.8%); and retailers in food, beverages and tobacco in specialised stores (7.1%).
Stefan Salzer, partner and managing director at Boston Consulting Group South Africa, said that, despite SA recently emerging out of its technical recession, he remains sceptical of any real improvement for the retail sector.
This is because consumers in general are still under pressure.
"We expect SA consumers to carry on monitoring their spending closely and focusing on necessity spending such as rent and groceries," said Salzer.
"Retailers have now also had a year to adjust to the challenging environment and we see some signs of them getting better at delivering the right kind of deals for cash-pressed consumers."
In his view, consumers will keep an eye out for great deals when shopping. "Consumers are more and more price-trained and the key to winning them over is having the right price and promotions strategy," said Salzer.
Kevin Lings, chief economist at Stanlib said retail sales fell by a very disappointing -0.6% m/m during July, after rising by what he regards as a much healthier 0.6% m/m in June. This is in real terms, therefore, seasonally adjusted.
The month-on-month sales performance was worse than market expectations, which was for spending to remain unchanged, Lings pointed out. This is despite the sample survey forecast for retail activity remaining relatively small.
"More positively, this is the first monthly decline in retail spending since January 2017, suggesting that consumer spending has been reasonably resilient in recent months despite weak consumer confidence and slowing income growth," said Lings.
In the past three months from May to July retail sales rose by 1.5% quarter-on-quarter (q/q), but in his view the decline in July clearly creates some concerns about the sustainability of retail activity in the third quarter of 2017.
On an annual basis, retail spending remained positive with growth of 1.8% y/y, although this is well below the 3.2% y/y recorded in June 2017. The latest annual growth rate was also worse than market expectations for an increase of 2.5% y/y, according to Lings.
"Importantly, the 12-month moving average of the annual growth rate remains positive at +0.8%, suggesting the retail sector is still managing to avoid a recession, albeit by a relatively narrow margin," he said.
"In addition, the growth in consumer credit remains very modest, arguing that most households have focused on better managing their household budgets during this period of increased economic uncertainty and slowing confidence."
Lings pointed out that during 2015 South African consumers were helped by relatively low inflation (4.6%) compared with an average wage increase of 7.7%.
"Unfortunately, this systematically changed in 2016 as inflation moved noticeably higher, and the SA Reserve Bank continued to hike rates. In addition, the banks became much more circumspect in the granting of credit. The net result is that at the start of 2017 the consumer has less discretionary income available for general retail activity," said Lings.
"At the same time, consumer confidence has fallen and is well below the long-term average. Fortunately, inflation has moved back inside the target range during 2017 and is likely to remain relatively low in the months ahead. This coupled with a further reduction in interest rates should provide some support to the household sector in the second half of 2017, helping retail sales avoid an outright recession - despite the weak labour market."
Jason Muscat, FNB senior economic analyst, regards the 1.8% y/y increase an encouraging start to the first quarter. He points out that it was driven largely by a 12.4% increase among "other retailers". This category includes book stores, stationers, jewellers, sporting goods retailers and trade in second hand goods.
"Anecdotally, we understand that trade in second hand goods have experienced a significant boost - much as second hand vehicle trade has - from the difficult economic conditions, but it's not possible to distinguish from the data whether this sub-component was a significant contributor," said Muscat.
"With the recent interest rate cut and the potential for another one this year, as well as a relatively benign inflation backdrop, there does appear to be some consumer relief on the horizon," said Muscat.
"We maintain, however, that this relief will likely be short-lived as tax revenue shortfalls will have to be bolstered by further tax hikes in the new year."