Retail trade sales drop by 6.7%

Wednesday, August 12, 2009

Pretoria - The retail trade sales for June decreased by 6.7 percent compared to June last year, Statistics South Africa (StatsSA) announced on Wednesday.

"Retail trade sales, at constant (2008) prices, for June 2009 reflected a decrease of 6,7 percent compared with June 2008," said StatsSA.

The major contributors to the decrease for the second quarter of 2009 compared with the second quarter of 2008 were general dealers, retailers in hardware, paint and glass and other retailers.

Standard Bank senior economist Dr Johan Botha said the figure was not totally unexpected as South Africans were worried about their finances and not spending money. "People are concerned about their job security," said Mr Botha.

He said the data was evidence that South Africa's economy is performing poorly.

"The economy is performing poorly and those who were hoping for a turnaround are seeing that this is not happening. The decline is quite big at 6.7 percent compared to the 4.4 percent recorded in May," he said. 

The data comes as the South African Reserve Bank's Monetary Policy Committee (MPC) begins its two-day meeting in Pretoria. The committee is meeting to decide whether to cut, increase or leave the bank's repo rate unchanged.

Mr Botha said he did not expect the committee to reduce interest rates.

Despite the MPC cutting the repo rate by 450 basis points since December, Mr Botha said it would take some time before this would be felt in the economy.

"It will take some time before the cuts make their way into the economy. We are perhaps in a hurry to see the full impact of the cuts," he said.

Johannes Khosa, an economist at Nedbank, told BuaNews that a cut in the repo rate for this month was unlikely.

Mr Khosa predicted that the next decrease, of 50 basis points, was only likely in September and October.

The repo rate is currently at 7.5 percent. The MPC left it unchanged when it met in June.