Jan Retail figures disappointing BD 5 April

ANALYSTS have described the 1,7% fall in seasonally adjusted retail sales figures for January as disappointing in comparison to those for December.

Reacting to the retail figures, released by Statistics SA yesterday, JP Morgan economist Taryn Rebeck said the retail sector remained depressed.

The fall in sales for the period were broad-based, with nine of the 19 retail trade categories showing declines.

The clothing, footwear and accessories sectors fell close to 5% in comparison to December. Food sales dropped by 2,9% and books fell by 6,3%.

Rebeck said the sector was still struggling after a knock in household confidence by high fuel prices last year, which reduced disposable incomes.

Retailers found the going hard as they were unable to pass on price increases to their customers, resulting in their profit margins being squeezed.

Retail sales grew 3,5% on the whole, and Rebeck expected this growth to continue for 2001, supported by cuts in interest rates and relief in personal taxes.

Strong domestic consumption was critical for economic growth, said Rebeck, but with 'consumer and business confidence still fragile', she said JP Morgan saw a conservative monetary stance hurting domestic demand. She said JP Morgan wanted to see demand supported by lower interest rates.

A global slowdown in economic growth was expected to have a negative effect on exports, meaning SA's economic performance would depend on growth in domestic demand.

Household consumption showed a 3,2% increase in 2000 on the year before, and was expected to maintain this growth through the year, said Rebeck.

She saw the R8,3bn in personal tax relief and 'lower debt-servicing cost' driving the growth rate in household consumption. A 10% to15% increase in residential property prices and an increase in real disposable income would underpin the momentum for the growth in consumption.