June’s retail growth just a third of that expected, raising recession risk
June’s retail sales growth was only a third of what economists expected, raising the risk that SA entered a technical recession in the second quarter.
Statistics SA reported on Wednesday that retail sales in June were 0.7% higher than in the same month in 2017. The economists’ consensus was retail sales growth would remain at about May’s 1.9%.
The three-month seasonally adjusted average for June, which will be used to calculate the retail sector’s contribution to second quarter GDP, was negative 0.4%.
SA suffered a 2.2% contraction of GDP in the first quarter, and pieces of the second quarter GDP published so far have raised the fear of two consecutive quarters of contraction.
In current prices, June’s total retail sales came to R81.7bn, down from R84.7bn in May, but higher than R79.4bn in June 2017.
Stats SA uses constant prices set to 2015 to strip inflation out of its figures. In these constant prices, June’s total came to R72.2bn, down from R75bn in May and slightly higher than R71.7bn in June 2017.
The highest annual growth rates were recorded for household furniture, appliances and equipment at 11.5%; followed by all "other" retailers at 7.6%; and pharmacies at 5.3%.
"Although consumer sentiment has improved markedly, reiterated by the still elevated consumer confidence reading released for the second quarter, the consumer continues to face challenges, weighed down by lacklustre household credit growth, increased consumer taxes, surging fuel prices and rising unemployment," said Investec economist Lara Hodes.
FNB chief economist Mamello Matikinca said she was concerned given the large increase in June 2017, which creates a high base from which to grow in June 2018.