Retail trade sales weakened in April with the year-on-year rate falling to 1% compared to a revised 6.7% in March, Statistics South Africa (Stats SA) said on Wednesday.
Market expectation was that retail sales would show growth of 4.5%.
Figures for April were boosted by the number of public holidays as well as additional school holidays after the Easter weekend, according to Stats SA.
Over the course of the month, sales increased by 1.5% on a seasonally adjusted basis down from 2.2% in March.
According to Nedbank economists, consumer spending and retail sales will remain weak this year with consumer confidence hurt by poor growth prospects locally and globally which will heighten worries about job security therefore making consumers careful with their spending.
“Today’s much weaker than expected retail sales data provide further evidence that consumer spending is losing momentum. Other recent indicators showed that underlying economic conditions have deteriorated over the past month.
“Given a fragile local economy and the considerable downside risk posed by Europe’s worsening debt and liquidity woes, the Reserve Bank’s Monetary Policy Committee (MPC) is likely to keep interest rates on hold at current low levels until March next year.
“However, should this trend continue, chances of a cut will rise,” noted Nedbank.
Retail sales are a key measurement of consumer expenditure levels.
Standard Bank economists said household consumption expenditure is expected to moderate to 3.8% year-on-year in 2012.
“However, household demand will remain the main driver of growth as the production side of the economy continues to struggle in the face of weak global demand. Standard Bank has pencilled in a GDP growth rate of 2.8% in 2012, from 3.1% in 2011,” said Standard Bank. – BuaNews