Retail trade sales lost steam in June, marking a deceleration from a 4.3% revised growth in May, Stats SA said in data released on Wednesday.
Sales were flat month on month, but a modest year-on-year rise (1.6%), along with gains in other key sectors, could still support a slight upward revision to second-quarter GDP growth.
On a seasonally adjusted month-on-month basis, sales were flat in June, a stagnation pointing to fading momentum midway through the year.
The strongest annual growth came from retailers in textiles, clothing, footwear and leather goods, which increased by 4.6%. Hardware, paint and glass reported a 5.4% increase.
On a seasonally adjusted quarter-on-quarter basis, sales were up 0.9% in the three months to June. The largest negative contributor was retailers in food, beverages and tobacco in specialised stores.
This decline was partially offset by gains from retailers in textiles, clothing, footwear and leather goods, retailers in hardware, paint and glass, and retailers in household furniture, appliances and equipment.
“It is noteworthy that some of SA’s main economic sectors recorded a meaningful improvement in economic activity in [the second quarter] including manufacturing with growth of 1.5% quarter on quarter, mining with growth of 3.9% and now retail sales, up 0.9%,” said Stanlib chief economist Kevin Lings.
“This will obviously support SA’s [second-quarter] GDP performance and could result in a welcome (but modest) upward revision to SA’s 2025 GDP growth expectation after all the negative news resulting from the 30% tariff imposed by the Trump administration as well as the sustained high rate of unemployment.”
Investec economist Lara Hodes noted the largest category — general dealers, which makes up over 44% of the retail basket — detracted from the headline outcome, as did the food, beverages and tobacco in specialised stores grouping. “Together they sliced 0.4 of a percentage point off the top-line reading.”
She noted that retailer confidence slipped “overall” in the second quarter, “in part due to a deceleration in two-pot withdrawal-fuelled spending”.
But consumers still have more disposable income than they did a year ago. “Consumers have benefited from a low inflationary environment and monetary easing, with a further interest rate cut announced in July, bringing the total decrease in interest rates to 125 basis points so far since the start of the easing cycle,” Hodes said.
Though June’s BankservAfrica take-home pay index (BTPI) showed a slight decline in nominal take-home pay compared with May, it remained nearly 12% higher than in June 2024.
But Lings highlighted several caveats to the current reading.
“National Treasury did not adjust the personal income tax brackets to take account of inflation, which will tend to dampen or offset some of the growth in household disposable income that is at a result of low inflation,” he said.
Second, inflation is expected to drift higher — above 4% — in the second half of the year, which will further erode disposable income.
The banking sector is also expected to maintain a cautious stance on the extension of household credit, and, lastly, consumer confidence remained weak during the first half of the year, “and is unlikely to rebound meaningfully during the remainder of 2025 given a range of socioeconomic concerns”.
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