This followed monthly declines of 2.4% in February and 0.9% in January 2012, Statistics SA reported on Wednesday.
Growth in SA's retail trade sales at constant (2008) prices for March rose by 6.8% year on year (y/y), exactly on the consensus forecast, from a revised y/y growth of 6.7% (7.2%). Forecasts among the ten economists ranged from 4.30% to 7.93%.
The highest y/y growth rates in March were recorded for retailers in textiles, clothing, footwear and leather goods (12.0%); retailers in household furniture, appliances and equipment (11.3%); and 'all other' retailers (9.8%).
In real terms, retail trade sales for first quarter of 2012 reflected an increase of 5.9% compared with the first quarter of 2011. This followed a 6.1% rise in 2011 and a 5.1% increase in 2010.
The largest contributors to the 5.9% increase in the first quarter 2012 were general dealers (5.9% and contributing 2.3 percentage points); 'all other' retailers (8.3% and contributing 1.0 percentage point); and retailers in textiles, clothing, footwear and leather goods (5.4% and contributing 1.0 percentage point).
Nedbank said that although retail sales were higher than expected over the month, the decline over the first quarter probably suggested that domestic demand is starting to lose momentum.
"Weaker growth is likely as the year progresses as consumer confidence is affected by weak employment and some worries about job security, while high inflation and administered price increases will erode purchasing power.
"Wednesay's figures suggest that household demand lost some momentum during the first quarter. Production numbers for the same period were even weaker.
"With economic activity expected to remain subdued for the remainder of the year, we expect the South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) to leave interest rates unchanged until late in the year if global conditions start to improve or to be postponed until 2013 if recent trends persist.
Absa Capital said headline growth in South African real retail sales tracked largely sideways in March to 6.8% y/y from a revised 6.7% in February (7.2%).
"This comes in marginally better than our own estimate, which had looked for y/y sales growth to have moderated to 6.4%.
"On a seasonally adjusted m/m basis, sales growth ticked up 2.1% in March, but this was not enough to offset the disappointing 2.4% month on month (m/m) contraction in February sales.
"In our view, however, even more important than the y/y sales growth figures is the fact that we now have some read-through into how the trade sector likely contributed to first quarter gross domestic product (GDP) growth (figures scheduled for release on May 31).
"This reveals a much more solemn story than what today's headline growth figure for March suggests.
"On a seasonally adjusted and annualised quarter on quarter (q/q) basis, we point out that retail sales actually contracted 4.5% in the first quarter.
"Granted, much of this deterioration in growth momentum can be blamed on "base effects" given the strong performance of this sector in the fourth quarter 2011 , when retail sales registered growth of over 9.0% q/q.
"Nevertheless it does not come as great news to an economy, which up until now has relied on healthy growth in consumer-led sectors to help offset the still largely lacklustre activity in production-led sectors (the dire performance of SA's mining sector in the first quarter 2012 is a good example here).
"Disappointingly it seems that this is unlikely to be the case for first quarter 2012 GDP growth, and consequently we would expect a meaningful slowdown in growth to the downside of 2.0% q/q from the fourth quarter improved 3.2% growth, when the figures are released later this month," the bank said.
Standard Bank said household spending was likely to be the main engine to growth as the supply-side of the economy (manufacturing and mining) remains vulnerable to the weak global demand.
The low interest rate environment and moderating inflation should continue to support consumer demand.
"Spending may have also been supported by increased credit demand. Household credit growth increased in March, driven by other loans and advances, which mainly include unsecured lending such as personal loans, (increased to 29.4% y/y in March) and credit card (12.3% y/y).
"Retailers have also reported an increase in credit sales."
In 2011 real gross domestic product growth of 4.0% as measured from the expenditure side was supported by real household consumption expenditure growth of 5.0%, government consumption expenditure of 4.5%, and gross fixed capital formation of 4.4%.
This year household and government consumption is expected to slow, but the hope is that fixed investment will rise.
On 1 April Finance Minister Pravin Gordhan said that although government spending was R4 billion below budget, this was due to under-spending on goods and services, rather than capital assets.
The government announced in November 2010 its New Growth Path (NGP) which has as its central focus a massive investment in infrastructure as a critical driver of jobs across the economy.
The framework identified investments in five key areas namely: energy, transport, communication, water and housing.
Sustaining high levels of public investment in these areas will create jobs in construction, operation and maintenance of infrastructure.
The NGP expected the infrastructure programme to trigger a local supplier industry boom.
That was essentially what happened in 2003 to 2007 when fixed investment grew at double-digit rates pushing GDP growth above 5%.
In the fourth quarter 2011, the private sector fixed investment seasonally adjusted annualised quarterly growth rate rose to 6.2% from 5.4% in the third quarter, that of public corporations to 9.6% from 9.0% and general government to 7.8% from 3.4%.
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