Business Maverick

Business Maverick

Carnage casualty: July retail trade sales fall 11.2% from June

SOWETO, SOUTH AFRICA - JULY 13: SANDF members walk past a damaged ATM in Diepkloof Square after looting on Monday. Members of the South African National Defence Forces (SANDF) are deployed to Diepkloof Square on July 13, 2021 in Soweto, South Africa. The soldiers were deployed to assist the police to quell the violent protests that started in KwaZulu-Natal last week with Zuma's supporters calling for his immediate release and have now spread to some parts of the country. (Photo by Gallo Images/Alet Pretorius)

July retail trade sales plunged 11.2% from the preceding month, the biggest monthly decline since April 2020 when the sector cratered under the weight of hard lockdown restrictions. That gives a pretty clear sense of the economic damage wrought by the wave of carnage that month, and is the latest indicator pointing to a third-quarter economic contraction. 

On an annual basis, retail trade sales fell 0.8% in July, Statistics South Africa (Stats SA) said on Wednesday. At first glance, the year-on-year number may not look that bad until one considers the sector’s ailing state of affairs in July 2020. Or the fact that in June year-on-year growth was 10.5%, 15.5% in May, and 95.1% in April. 

“Few would have expected a contraction in year-on-year terms, given that the base in 2020 was still impacted by some lockdown restrictions and a severe wave of Covid in the winter months,” Razia Khan, Chief Africa Economist at Standard Chartered Bank in London, told Business Maverick

Standard Chartered expected a slowdown in growth to 3.5%, so the number fell way below expectations, highlighting the impact of the July unrest in KwaZulu-Natal and Gauteng that killed more than 350 people. 

Sales of household furniture, appliances and equipment comprised the biggest decliner among sub-sectors, falling 10.2% year-on-year. 

In the three months to the end of July, Stats SA said retail trade sales decreased on a seasonally adjusted basis 2.9% compared with the preceding three months. This was the first decline on this front since June last year, probably the most wretched three-month period that the retail sector has ever faced. 

July 2021 was that bad, largely because of the mayhem and madness unleashed after the jailing of former president Jacob Zuma for his sneering contempt of the apex court. 

Among other things, the data seal the case for the South African Reserve Bank to hold interest rates steady next week when its Monetary Policy Committee meets. It is also likely to lead to further downward revisions in South Africa’s economic growth forecasts for 2021. With unemployment on the rise along with tensions in the governing ANC, there is plenty of fuel out there to stoke the next social explosion. This economy can ill afford another battering on that scale. DM/BM

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