Sales growth improved considerably from an average of -3.5% y/y in the first quarter (Q1) 2010 to 2.5% y/y in Q2 2010.
This also points to a considerable improvement in retail sales in June.
However, much of the improvement has been linked to the hosting of the FIFA World Cup, which suggests that wholesale sales growth is likely to decline somewhat in the third quarter, in line with the more gradual pace of recovery in domestic demand.
A number of wholesale trade sales categories performed extremely well in June, boosted by the buoyancy during the soccer tournament. Growth in wholesales sales of gases, fuel and related products was boosted by increased domestic traveling, rising to 39.3% y/y in June from 37.4% y/y in May.
Growth in the wholesales of food and beverages increased considerably from 2.7% y/y in May to 6.8% y/y in June, albeit also reflecting a statistical distortion related to lower sales in June 2009, whilst growth in clothing wholesales increased from a depressed -12.0% y/y in May to 3.0% y/y in June.
One expects that the considerable improvement in jewellery and silver sales of 96.7% y/y in June was also boosted by the strong presence of tourists during the month.
Unfortunately, despite the boost from the tournament's buoyancy, growth in wholesale trade sales growth did decline from May, largely lead by considerable decline in the wholesales of productive inputs during the month.
Growth in the wholesale of metals and metal ores declined from 22.6% y/y in May, to 17.5% y/y in June, whilst the wholesale sales growth in construction and building materials declined from 10.4% y/y in May, to less than half, at 4.9% y/y in June.
Even more concerning is that the wholesale of machinery and equipment turned negative in June at -11.5% y/y in the month, from 6.4% y/y in May.
Although these declines may have been as a result of lower productivity during the soccer tournament, distorting real levels of demand, these also point to a loss of pace in the recovery of the domestic productive sectors, which is in line with weaker sentiments in business.
Encouragingly, wholesale sales of goods and services remained strong at 7.4% y/y in June, albeit declining from 8.8% y/y in May.
Growth improved to 10.1% y/y in Q2 2010 from 0.2% in Q1 2010.
The encouraging strength in recovery of domestic demand should assist in keeping GDP growth in the trade sectors positive in the remaining quarters.
Nevertheless, the rise in consumption, possibly also feeding into a rise in credit demand, will argue against a further decline in interest rates in the remainder of the year.
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