Retail trade sales paint a rosy picture

Posted On Thursday, 06 November 2003 02:00 Published by
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Real retail trade sales for the three months to August rose 4.4 percent

November 6, 2003

By Vera von Lieres

Cape Town - Real retail trade sales for the three months to August rose 4.4 percent against a year ago, building on the previous month's strong trend and pointing to buoyant growth by Christmas, economists said yesterday.

Combined with the release earlier this week of a surge in the latest motor vehicle sales, data indicated that consumer spending was rising strongly.

The only possible blip on the horizon in an otherwise positive picture was retrenchments and job losses in the mining, manufacturing and construction sectors in the third quarter, which could extend into the fourth.

Econometrix director Tony Twine said:

"That might be the only fly in a pretty strong ointment, but it's not clear how much of a dampener that would be."

Real retail trade sales figures released last month signalled a break out of the mould established this year, which was marked by a moderate trend, market commentators said at the time.

Growth had come in around the 2 percent to 3 percent mark well into the second quarter of the year, but there was a noticeable acceleration from July as interest rate cuts kicked in.

Statistics SA said that on a seasonally adjusted basis, real retail sales rose 2.3 percent in the three months to August versus the three months to May.  


Standard Bank economist Njabulo Sithebe noted that the outlook was positive, reinforced by the lower interest rate environment. Growth above 4 percent in retail trade sales should definitely be maintained ahead of Christmas, possibly flirting with the 5 percent level.

Twine also anticipated a further strengthening as additional rate cuts flowed through to consumers' pockets.

"You must remember that by August only one interest rate cut had come through. As we move towards year-end there will be a lot more discretionary spending power in the hands of consumers and business as well."

Dennis Dykes, the group chief economist at Nedcor, said consumer spending should continue to climb strongly on interest rate cuts and falling prices.

"There has been a quantum leap in motor vehicle and retail sales over the past two months. We are heading for very strong growth by Christmas and beyond."

"The key question is, against this background, do you cut interest rates again?"


Publisher: Business Report
Source: Business Report

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