Picture: 123RF/ROBERTSROB
Picture: 123RF/ROBERTSROB

Retailers surprised economists in August, with annual sales growth of 2.5% — far higher than the consensus 0.3%.

In current prices, total retail sales in August came to R86.7bn, up from July’s R82.2bn, Statistics SA reported on Wednesday.

Stats SA sets prices to 2015 levels to strip inflation out of its retail sales figures. At constant 2015 prices, August’s retail sales came to R76.8bn.

Of the seven types of retailers Stats SA segments its report into, furniture stores enjoyed the fastest annual sales growth at 10.4%, followed by clothes shops which grew sales 6%. Only hardware stores suffered a sales decline, with their contribution falling 2%.

The three-month, seasonally adjusted average for retail came to 0.5%, indicating the sector will help SA’s third quarter GDP recover from declines in the first and second quarters.

The retail sector is an important indicator of consumer spending, which drives growth in the economy. The sector has been knocked hard in recent months by a weaker rand and higher oil price, which has cut into disposable income.

Growth in the sector in the third quarter so far is a stark contrast to the weak performance in the second quarter of the year, which contributed to SA’s descent into a recession for the first time since the global financial crisis.

Investec expected August’s figure to moderate to about 0.5% year-on-year, in line with the Bureau of Economic Research’s (BER) third-quarter retail survey, which suggests that “business conditions in the retail sector remained constrained during the third quarter”.

“Specifically, muted sentiment levels, coupled with higher consumer and personal income taxes, lacklustre household credit extension and mounting fuel price pressure, continue to weigh on disposable income,” said Investec economist Lara Hodes.

FNB chief economist Mamello Matikinca expected a slight increase in August as concluded public-sector wage settlements and back pay supported consumption.

A Bloomberg survey of economists expected a 0.1% contraction year-on-year and a 0.8% contraction on a month-on-month basis.

MenonS@businesslive.co.za