The main contributor to the rise was the 'textiles‚ clothing and footwear' sector‚ which surged by 14.3% y/y as Valentine's Day sales did well. On a monthly basis‚ total retail sales jumped by a seasonally adjusted 2.7% following a 1.7% contraction in January.
Nedbank said that with the poor economic outlook and weak consumer confidence‚ they do not expect the strong rise in retail sales to be sustained throughout the year. Consumers were likely to be more cautious on spending. Growth in household spending and therefore in retail sales was likely to moderate in the months ahead.
Absa Capital's Peter Worthington said the strength of retail sales in February was surprising given that the Bureau of Economic Research's consumer confidence index for the first quarter‚ which was mostly sampled in February‚ posted a sharp decline‚ taking the index to its worst levels in nearly a decade.
"Consumers were exceptionally pessimistic about whether it was a suitable time to buy durable goods. It is a little hard to square this release with our view that the economy is experiencing a sharp deceleration in consumer demand. However‚ we would make two points. First‚ the retail sales series is inherently volatile‚ and too much cannot be inferred from any one single release. Second‚ the retail sales release does not include certain durable goods such as cars (where sales substantially backed off in February and March) or nondurable goods such as petrol. Nor does it include services (which account for 43% of total household consumption expenditure)‚ where the rates of growth are flat. In fact‚ the retail sales survey only captures 35% of total household consumption expenditure. However‚ there is no getting away from the fact that it was a good release‚ likely to cheer the South African Reserve Bank (SARB) as it worries about its stagflationary dilemma‚" he said.
Standard Bank's Shireen Darmalingam was equally concerned that the February retail sales did not herald a revival in household consumption expenditure.
"We believe that consumers are likely to put the brakes on spending in the first half of this year. Real household disposable income is growing at a slower pace‚ and household debt levels appear to be ticking up. This poses downside risks to overall household consumption expenditure‚ which accounts for 60% of GDP‚" she said.
First National Bank's (FNB) John Loos said although the February retail sales growth produced an "upside surprise"‚ this did not change FNB's 2013 forecast of 2% to 3% average real retail sales growth.
"After a significant broad slowing in 2012‚ we remain of the belief that the real retail sales growth rate will now settle into a growth range of between 2-3%‚ in line with our real household consumption expenditure forecast of 2.5% for 2013 as a whole‚ and not too different from our real gross domestic product growth rate of 2.4% for the year‚" he said.
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