South African Retail Sales Growth Eases as Economy Stalls
Retail sales rose 1 percent from a year earlier, below the revised 4.7 percent pace in September, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 10 economists was for growth of 4 percent. Sales fell 1.7 percent from a month earlier.
South Africa’s economy expanded at the slowest pace in the third quarter since a recession in 2009 after the worst mining strikes since the end of apartheid and transportation-industry protests curbed production. The unemployment rate rose to 25.5 percent from 24.9 percent in the previous quarter, weighing on consumer spending, which makes up about two-thirds of expenditure in the economy.
“The growth rate is likely to remain moderate in the months ahead as weak consumer confidence and high debt make consumers more cautious on spending on non-essential items, while high inflation erodes disposable incomes, offsetting the benefit of high wage settlements,” Nedbank Group Ltd. (NED), South Africa’s fourth-largest bank, said in e-mailed comments.
The rand declined as much as 0.3 percent to 8.6918 a dollar and was trading at 8.6653 as of 10:29 a.m. in Johannesburg. The yield on the government’s 6.75 bonds due March 2021 dropped 3 basis points to 6.48 percent.
The Reserve Bank cut its benchmark lending rate for the first time in 20 months to 5 percent in July to stimulate spending and spur growth. The bank’s Monetary Policy Committee kept rates on hold on Nov. 22, saying that a weaker rand and high wage settlements posed risks to the inflation outlook.
“Weak retail sales numbers suggest that demand-push inflation is likely to remain contained,” Nedbank said. “We believe that the Monetary Policy Committee will keep monetary policy neutral over an extended period in order to balance weak growth prospects and rising inflationary pressures.”
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