Nedbank: Retail sales

19 Jan.

Nedbank Economic Commentary: Retail sales.

Retail sales growth eased but remained firm in November.

• Retail sales growth momentum remained firm in November, with total sales rising by 6,8% y-o-y from a revised 7,5% (previously 7,4%) in October. Sales fell by a seasonally adjusted 0,3% m-o-m.
• Strong sales growth of ‘household furniture, appliances and equipment’, ‘hardware, paint and glass’ as well as ‘textiles, clothing, footwear and leather goods’ remained the key drivers.
• While sales are expected to have picked in December for seasonal reasons, the underlying trend will probably start to soften due to high inflation eating into disposable incomes. However growth is still expected to be reasonable due to low interest rates.
• These figures do not change our view that the Monetary Policy Committee’s (MPC) will leave interest rates unchanged tomorrow. Domestic demand remains moderate and there are downside risks to economic growth emanating mainly from the uncertain global outlook. Local inflation has picked up, but demand-driven inflation remains subdued. These factors are likely to persuade the MPC to leave interest rates unchanged until around November this year.

Comment

Retail sales growth momentum remained firm in November, with total sales rising by 6,8% yo- y from a revised 7,5% (previously 7,4%) in October. Sales growth has remained above 5% y-o-y on a monthly basis since June 2010, although that partly reflected the low base established in 2009.

All categories of retail sales recorded positive growth during November. Key drivers of sales growth remained ‘household furniture, appliances and equipment’, which increased by 10,4% y-o-y from 15,4%, ‘hardware, paint and glass’, up by 17,6% y-o-y from 15,5%, as well as ‘textiles, clothing, footwear and leather goods’, which rose by 7,9% y-o-y from 10,6%. Sales by ‘general dealers’ increased by 5,5% y-o-y from 4,0%. These categories benefited from early festive season shopping.

On a seasonally adjusted basis total sales fell by 0,3% m-o-m. …

See the full Commentary