Retail trade sales likely to remain weak

Tuesday, January 19, 2010

Pretoria - Economists say November retail trade sales, due to be released tomorrow, are likely to remain weak, showing that South Africans are still facing tough economic times.

"We expect rebound on a monthly basis. The last two months of the year are normally higher due to demand but on an annual basis we expect the rate of decline to have moderated due to base effects," said Nedbank economist Johannes Khosa on Tuesday.

Nedbank expects a 6.4 percent year-on-year decline. Retail trade sales released by Statistics South Africa in October fell by 6.5 percent.

Senior economist at Standard Bank, Johan Botha, said consumers are under pressure as is reflected in weaker disposable income, household debt and unemployment.

"This is not good news for the retail market," said Botha, adding that Standard Bank expects figures to fall by 4 percent year-on year in November.

"We could possibly be seeing retail growth again at the end of the first quarter," said Botha.

Meanwhile, the Monetary Policy Committee of the South African Reserve Bank is due to meet next week for their first meeting for 2010 - and will announce their decision on the country's repo rate next Tuesday.

"The MPC will base its decision on the stronger Rand which implies that inflation is on the down, On the other hand we also don't know what the impact of electricity prices is going to be. The MPC is likely to keep the repo rate unchanged," Botha said.