Retail trade fell by 0.5% from a year earlier in August after a downwardly revised 1% decline in the prior month and compared with market forecasts of a 1% drop, Stats SA data showed on Wednesday.
This was the ninth consecutive month of decreases in retail activity, though the slowest in the sequence that began in December 2022.
On a month-on-month basis, sales volumes increased by 0.2%, after a 0.4% increase in July.
FNB senior economist Siphamandla Mkhwanazi said at this stage, these outcomes suggest that the retail industry will still contribute positively to the third quarterly GDP growth.
A closer look at the data shows four out of seven categories recorded a decline in annual volumes.
The largest declines were recorded among the general dealers and hardware material categories, falling 3.8% and 5% respectively.
Household furniture and pharmaceutical retailers categories declined by 1.6% and 1.2% respectively, each detracting 0.1 percentage points from the headline number.
On the opposite end, a stronger performance by the clothing and footwear retailers category persisted, with 11.3% year-on-year growth in volumes, contributing 1.7 percentage points, supported by the food and beverages retailers category with a 0.7%, or a 0.1 percentage point, contribution.
Other retailers grew by 0.5%, contributing 0.1 percentage points to the headline number.
Mkhwanazi said credit data suggests that demand and supply for consumption credit, especially credit cards, remains strong, both in the bank and nonbank sectors.
“In addition, anecdotal evidence suggests that real wage growth might be turning marginally positive, for the first time since the second half of 2021, largely due to slower inflation,” Mkhwanazi said. “If sustained, these could provide marginal support to shopping activity in the near term.”
However, Mkhwanazi added that these are counteracted by our expectation of a further tightening in lending standards, as the cumulative impact of past rate decisions filters through, as well as depressed consumer sentiment.
“As such, we maintain our view of subdued growth in household consumption expenditure for the remainder of the year,” he said.
Investec economist Lara Hodes said while sentiment did pick up among retailers in the third quarter, in the non-durable goods and semi-durable goods sectors of the market, it remains below the long-term average.
“Retailers continue to face a number of operational challenges, notably load-shedding,” Hodes said.
She said despite a deceleration in consumer price index (CPI) inflation from levels recorded earlier in the year, consumers remain financially constrained.
“Interest rates, which are likely to remain at elevated rates for longer, continue to weigh on the indebted, with many consumers relying on credit to fund the high cost of living, while the expanded unemployment rate, which includes individuals who desire employment regardless of whether they are actively seeking work, is above 42%, demonstrating the extent of SA’s unemployment predicament,” she said.
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