South Africa retail sales up

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JOHANNESBURG — South Africa’s retail sales rose more than expected in April, official data showed yesterday, but a weak outlook for demand leaves the door open for another rate cut.
Statistics South Africa said retail sales rose 3,2% year—on—year compared with 2,7 % in March. The statistic’s agency revised the figures back to January 2008, making the April print the fourth month retail sales were up.
Economists polled by Reuters forecast a 2,1%year-on-year increase in retail sales for April.In the three months to April, retail sales rose by 2,2 % compared to the same period a year ago.
“Essentially it underpins our view that the consumption recovery in South Africa is underway,” said Jeffrey Schultz, macro strategist at Absa Capital.
Retail sales are unlikely to be buoyant in the next few months given high consumer debt levels and bleak labour market prospects.
“I think that’s likely to keep a lid on retail sales and the consumption recovery in South Africa, which is likely to be relatively modest this year,” Schultz added.
A survey on Monday showed consumer confidence slipped in the second quarter as people took a dim view of their finances partly due to worries about their jobs.
With consumption, which drove the economy to record growth from 2003 to 2007, analysts said the door was still open for another interest rate cut to add to 550 basis points worth of reductions since December 2008, which took rates to 3-decade low.
“I think the challenges are still ahead, what happens more towards the end of the year when we don’t have the benefit of the soccer World Cup,” said Colen Garrow, economist at Brait.
“I think the outlook later in the year will be for a rate cut because the key components of GDP are likely to trend weaker,” he added.
The rand firmed to 7,5550 against the dollar at 1000 GMT, from 7,5920 before the data was released at 0930 GMT. The yield on the 2015 bond fell to 7,97% from 7,985%. – Reuters