Nov. 17 (Bloomberg) -- South African retail sales rose more than expected in September as a series of interest rate cuts supported a rebound in consumer spending, while a rally in the rand cut import costs.
Sales growth accelerated to an annual 6.1 percent from 4.6 percent in August, Pretoria-based Statistics South Africa said on its website today. The median estimate of 13 economists surveyed by Bloomberg was 4.3 percent. Sales rose a seasonally adjusted 0.4 percent in the month.
“The consumer is in reasonable shape,” Kevin Lings, an economist with Stanlib Asset Management, said by telephone from Johannesburg. “Wages are rising faster than inflation. Debt servicing costs are low. I’m expecting that the retail numbers will hold up in the final quarter of the year.”
The retail figures may weaken the case for an interest rate cut tomorrow, Lings said. The Reserve Bank has reduced its key rate eight times to 6 percent since December 2008 and is likely to cut it again tomorrow, according to 17 of 22 economists surveyed by Bloomberg before today’s announcement. A 33 percent rally in the rand against the dollar since the beginning of last year has pushed the inflation rate to the lowest in more than five years, opening the door to further rate cuts.
“Over the past few months we have seen the consumer take on a little bit more credit,” Lings said. “In terms of raw consumer activity, there is no need for more stimulus.”
The rand strengthened to 7.0385 per dollar at 11:52 a.m. in Johannesburg, from 7.0541 before the release of the inflation data.
The Foschini Group Ltd., a clothing retailer, yesterday said sales rose 12 percent in the six months through September, as it opened 42 new stores. JD Group Ltd., a furniture and electrical goods retailer, on Nov. 15 said its sales rose 3 percent in the year through August, as consumer spending rebounded following the country’s first recession in 17 years.
South African consumer confidence was little changed in the fourth quarter, close its highest level since the last three months of 2007, according to a survey released yesterday.
The FNB/BER consumer confidence index was 14, compared with 15 in the previous three months, First National Bank and the Bureau for Economic Research said on their websites.
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