South African Retail Sales Growth Slows as World Cup Spending Effect Wanes
South African retail sales growth slowed to an annual 4.6 percent in August, almost half the pace in the previous month, undermining the recovery of Africa’s biggest economy.
Sales growth eased from a revised 8 percent in July, Pretoria-based Statistics South Africa said on its website today. The median estimate of eight economists surveyed by Bloomberg was 8.5 percent for August. Sales fell a seasonally adjusted 1.4 percent in the month.
Consumer spending eased after the soccer World Cup boosted sales of food, drinks and clothing in June and July. Consumers account for two-thirds of demand in the economy and a slump in spending may curb economic growth, which slowed to an annualized 3.2 percent in the second quarter.
“This shows the sluggish underlying recovery that is going on once the World Cup effect fell away,” Peter Attard Montalto, an emerging markets economist at Nomura International Plc in London, said in a note to clients. Sales may get support in the second half of the year from “credit extensions and a slow turn in the labor market,” he said.
The rand was at 6.8366 against the dollar as of 12:05 p.m. in Johannesburg, little changed from 6.8342 before the data was released. The currency has rallied 12 percent against the dollar since June 1, fueling demand for cheaper imports of clothing and furniture.
Slower Growth
Manufacturing data, released yesterday, also signaled slower economic growth in the third quarter. Factory output, which accounts for 15 percent of the economy, rose an annual 5.3 percent in August, the slowest pace in six months, as strikes disrupted output at carmakers and the stronger rand curbed export demand.
The Reserve Bank cut its benchmark interest rate by half a percentage point to 6 percent last month, the eighth reduction since December 2008, to help spur the economy.
“Chances of another cut have been boosted by the weak retail sales and manufacturing production numbers as well as the strong rand, against the backdrop of a subdued inflation environment,” said Isaac Matshego, an economist at Nedbank Group Ltd. in Johannesburg.
To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.
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