15 May, 2013 16:17

Retail Sales Rusty in March

In March, retail sales rose by just 2.8% year-on-year. And economists are reluctant to draw much from these numbers because of the high number of public holidays in the month. However, this latest indicator is yet another sign that the economy is far from flying.

Expert views

1. Azar Jammine from Econometrix:

It is extremely difficult to draw conclusions from this data, because of the role of public holidays, including Easter. This March had two or three fewer working days than March last year. There has been a tendency in recent years for lots of shops to be open on public holiday, and some people have been shopping more. So I am unsure whether this is a strong or a weak number. Therefore we could see a huge rebound in retail sales in April, as we saw with the April rebound in vehicle sales.

2. Dennis Dykes from Nedbank:

This number was slightly better than I had expected – I had expected an increase of 1.8%. Public holidays may have helped or hindered retail. Overall, the trend is not all that encouraging – with sales rising at a very moderate rate. Real disposable incomes are not rising as they were. Generally, employment has slowed. Interest rates are still low, but access to credit is still really tough.

3. John Loos from FNB:

Monthly data can be volatile, and for this reason we prefer to focus on the 3-month moving average to analyse the trend. For the 3 months up to and including March, the real year-on-year growth rate in retail sales was 3%. This implies a slight 1st quarter improvement on the final quarter of 2012 which recorded only 2.4%. To get a longer term perspective, the March level of real retail sales brings the cumulative growth since the pre-recession high of April 2008 to 14.4%, coming after a 2008/9 dip in sales. While representing a fairly good recovery, this period is still a far cry from the 60.6% growth rate from January 2002 to April 2008. The mild early-2013 improvement in real retail sales growth could possibly be explained by an estimated rise in real economic growth, after widespread strike action in the 2nd half of 2012 slowed economy-wide production to abnormal lows. In addition, a slight slowing in retail price inflation must also have contributed slightly to improved 1st quarter real retail sales growth. However, we remain of the belief that the slightly better 1st quarter growth figure doesn’t mean any looming major upturn in real retail sales growth. Rather, after often far-exceeding even the healthy real household disposable income growth rate for much of the last 3 years, we believe that real retail sales growth has come down more into line with real disposable income growth.


The retail sector remains fragile. This latest data is not clear-cut and therefore we will have to largely focus on other indicators to see the true path of the economy. Maybe there will be some useful clues later in the month when the Reserve Bank brings its views to the fore?

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