The SA Daily
11 December 2019
Little retail cheer here
- Retail confidence is still far below the 50-pt neutral threshold as well as below the pre-2008/09 crisis historical average of 52 index points.
- Still, the BER retailer business confidence index has leapt to 30 index points in Q4:19, from just 11 points in Q3. But, even at 30 points, only 3 out of 10 retailers feel confident about trading conditions.
- Confidence is most likely to deteriorate even further due to the renewed, and the most severe in a decade, pervasive power cuts by Eskom.
- Retail sales volumes likely recorded a negligible increase of 0.9% y/y in October after the poor showing of just 0.2% y/y in September; data is due out later.
- Retail sales growth will likely average 1.3% y/y in 2019 (2.4% y/y in 2018). However, this may rise modestly to 1.6% y/y in 2020, partly due to benign inflation.
- Retail trade volumes comprise a significant proportion of household consumption expenditure, which is likely to average just 1.2% in 2020 and 1.7% in 2021; this would be below the historical household consumption average of 2.3% per annum between 2011 and 2018.
- Risks to consumer spending are therefore to the downside, as consumers face a higher tax burden, rising unemployment, labour market uncertainty, skilled emigration, and depressed confidence.
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