Still tough times for SA households

Wednesday, January 20, 2010

Pretoria - Retail trade sales in November 2009 fell by 6.6 percent, indicating that South African households are still facing tough times.

Statistics South Africa (Stats SA) announced on Wednesday that retail trade sales, at constant (2008) prices, for November 2009 reflected a decrease of 6.6 percent compared with November 2008.

Sales fell at 6.5 percent in October 2009.

Nedbank economist Carmen Altenkirch said that the figure was below market expectation.

"On a month-on-month basis November is the month where sales go up as a result of pre-Christmas shopping. However, there is no evidence of this in the figures even though there were massive discounts to entice consumers," she noted.

In the short term Nedbank does not expect an improvement in retail trade sales.

"We still have high levels of unemployment and low consumer confidence," she said, adding that things were likely to improve when the 2010 FIFA World Cup kicked off in June.

"This will likely improve spending power. The World Cup will not only be bringing tourists but will hopefully improve the sentiment of South Africans," she said.

The bank further said it was unlikely that the Reserve Bank's Monetary Policy Committee (MPC) would change the interest rates when it meets next Tuesday.

"We think the MPC will keep rates unchanged, actually for the whole year. We are likely to see a hike in early 2011 because the economy would have gained momentum," she concluded.

Standard Bank senior economist Dr Johan Botha said the data was a bit of a surprise as he was expecting a bit of a pick up in retail trade sales.

He said it was an indication that South Africans were still battling financially.

"In general these are poor numbers; it shows that households are still uncertain... (they) don't want to spend. There is concern about job security and shrinking disposable income. Their financial health is not good," he said.

Standard Bank had predicted that retail sales would fall by 4 percent.

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