Retail sales growth to soar in Dec
Growth in South African retail sales will likely moderate in 2011, Moody's Analytics economist Mekael Teshome said on Friday, 10 December 2010.
November and December retail sales numbers are however expected to surprise on the upside because of the holiday season.
Real retail sales rose 6.1% year-on-year in October after a 6.0% rise in September, according to Statistics SA figures. The October rise in retail sales was the tenth consecutive increase.
Improving real income growth and consumer confidence are expected to give retail sales growth a boost.
Interest rates, which are at their lowest in about 30 years, are helping local consumers in servicing debt.
The SA Reserve Bank (SARB) reported in its third quarter Quarterly Bulletin that the ratio of debt-service cost to disposable income continued to decline in the third quarter, receding to 7.8% from 8.0% in the second quarter.
Resilient consumer confidence is another sign that the recovery in domestic demand is durable, Teshome says.
A Bureau for Economic Research (BER) consumer confidence survey has shown that high-income earners see the present as a good time to buy durable goods.
Teshome says this bodes well for overall spending in the near term, as high-income earners account for what he called a disproportionate share of consumer spending.
He says the downside is that low and lower middle income earners are still hesitant to buy, and that a weak job market is likely to blame.
Poor job prospects and lingering uncertainty regarding future income could lead consumers to save more and spend less, he concluded.
Source: I-Net Bridge
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