Retail sales rebounded in July, driven by strong performances in clothing, general dealers and hardware, signalling that household consumption would remain a pillar of economic growth in the early stages of the third quarter.
According to Stats SA, retail trade sales rose 5.6% year on year in real terms, after weak growth of 1.6% in June. The latest reading marks the strongest annual reading since April. On a month-on-month seasonally adjusted basis, sales rose 2.1% in July, rebounding strongly from contractions of minus 0.1% in June and minus 0.4% in May.
“The main contributor to the stronger-than-expected GDP growth in the second quarter of 2025 was household consumption, and the first retail sales reading for the third quarter suggests the economy will still be highly reliant on consumer resilience,” Oxford Economics senior economist Jee-A van der Linde said.
The largest contributors were retailers in textiles, clothing, footwear and leather goods, which increased 10%, adding 1.7 percentage points; general dealers, up 3.3% (1.4 percentage points); all “other” retailers up 11.9% (1.2 percentage points); and hardware, paint and glass, which surged 13.2%, contributing one percentage point.
“The strong retail sales reported for July is encouraging from a [third quarter] GDP perspective, though this covers only one month of the quarter and the resilience needs to continue to ensure a boost to GDP growth,” said Elna Moolman, Standard Bank group head of SA macroeconomic research.
“Our forecasts imply slightly stronger year-on-year GDP growth in [the second half of the year] than in [first half], and so far many of Stats SA’s indicators point to an improvement early in [the third quarter] relative to [the second quarter].”
For the three months ended July, retail sales grew 3.8% year on year, driven by clothing retailers and general dealers. On a seasonally adjusted quarter-on-quarter basis, sales rose 1.3%. Positive contributors were clothing retailers, hardware and paint, “other” retailers and general dealers. The only drag came from specialised food, beverages and tobacco stores, which declined 1.2%, subtracting 0.1 of a percentage point.
“A number of tailwinds are supporting consumers, including low inflation, lower interest rates, renewed access to their two-pot retirement savings and employment created in the public sector,” Moolman said.
She said these tailwinds “counteract” the negative effect on household spending power from not adjusting personal income tax thresholds for inflation in this year's budget.
“Some of the tailwinds for consumers will fade in the coming months, with inflation, for example, already slightly higher than it was just a few months ago. However, there should at some stage be further interest rate relief and we remain relatively constructive about the outlook for consumption.”
However, according to Van der Linde, some dark clouds are hanging over retail prospects during the rest of the quarter.
“With the 30% US import tariff having come into effect on August 7, there is a risk that the third quarter employment numbers could reflect even more economic strain. Companies will be likely to be compelled to scale back [or] delay employment and investment plans as they traverse an uncertain economic landscape,” he said.
Update: September 17 2025
This story has been updated with more comment.
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