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Standard Bank Group
The SA Daily 14 May 2019

Some reprieve from retail sales

  • Financial conditions, per the Standard Bank Financial Conditions Index (FCI), were steady at -0.30 in March; this is better than last year’s -0.54 average.
  • Financial conditions improved to -0.38 in 1Q19, from -1.04 in 4Q18, supported by continued growth in credit uptake. FCI constistuent variables too improved, leading to an easing in financial conditions in 1Q19 (see our report 1Q financial conditions improved). Easing financial conditions, and still benign inflation, should support the consumer, and should also somewhat counteract higher fuel and electricity prices.
  • The retail sales numbers for March due out tomorrow will show if this consumer-linked sector can counteract the negative impact of mining and manufacturing which both contracted in 1Q, detracting from GDP growth.
  • We believe that retail sales likely held up, supported by better financial conditions. However, the risk factors are the extreme power cuts in 1Q, the poor SA labour market, and weak consumer confidence.
  • We forecast a GDP contraction of 1.0% q/q seasonally adjusted for 1Q due largely to poor production activity and power cuts.

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