By Kevin Lings
Stats SA have released the retail sales data for March 2009. According to this latest survey, retail sales fell by a substantial 5.3%y/y in real terms in March. This compares with a revised decline of 4.4%y/y in February. The March decline is the weakest retail sales number in more than a decade. The market was expecting a decrease of 5.5%y/y in March.
Next month’s April retail sales data is also expected to be weak given the large number of public holidays in the month, although the increase in sporting events may have had some offsetting effect.
Importantly, in the three months to March 2009, retail sales were down 2.9%y/y, in real terms. (Unfortunately, Stats SA does not produce a seasonally adjusted m/m number for retail sales, which means it is not possible to calculate an accurate q/q estimate of retail activity). This, together with the sharp decline in manufacturing activity in Q1 2008, will clearly have a negative impact on the first quarter estimate of SA GDP, which is due for release on 26 May.
There is no doubt that SA consumers are under pressure and effectively deleveraging, either willingly or because the banks have significantly tightened up their lending criteria. The prior increases in interest rates, the introduction of the NCA, a slump in disposable income growth, tighter lending criteria within the banking system, a slowdown in house price growth, increased job-losses and worsening consumer confidence have all had a measurable impact on overall consumer activity. This is expected to continue throughout most 2009, although the pressure should ease during the course of the year as inflation falls and interest rates decline.
Source: Kevin Lings, Stanlib, May 13, 2009.