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The SA Daily 17 September 2019

Lowdown on SA retail

  • Stats SA July retail sales data tomorrow will shed light on the state of the SA consumer at mid-year. Consensus foresees sales growth of 2.6% y/y (0.3% m/m), (after the 2.4% y/y and 0.3% m/m in June). The July forecasts range from 1.5% y/y to 3.5% y/y.
  • H1:19 retail sales growth averaged 1.7% y/y less than the 3.6% y/y for H1:18. Still, retail sales growth is being somewhat supported by benign inflation, accommodative rates, and looser credit conditions. And, employment growth in the non-informal sector has held up, also supporting consumer spending. In Q2:19 informal non-agricultural employment increased by 114,000 — but formal non-agricultural employment fell by 49,000.
  • We forecast total 2019 household consumption expenditure (HCE) at an average of 1.3% (1.8% in 2018), then rising to 1.7% in 2020.
  • However, consumer confidence is subdued, and the labour market uncertain and turbulent. The latest oil price spike could also weigh on buying power. Most retailers, per the BER business confidence index, are therefore downbeat. The business confidence index was 17 index points in Q3:19, implying just two out of 10 retailers are optimistic about SA’s business conditions.

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