The year-on-year fall of 0.8% in retail trade sales, unveiled by Statistics South Africa (Stats SA) on Wednesday, was not a sharp decline, but it is still concerning. South Africans were spending less in the shops in January 2023 than they were in the same month in 2022, and this is never a good sign.  

The suspects in this case are pretty clear, with one of the smoking guns at Megawatt Park. The surge in rolling blackouts is not only adding to retailer costs but also curtailing trading hours for smaller businesses that cannot afford backup power. And of course, the wider impact of the power crisis includes a slashing of economic growth, translating into fewer jobs and less money in people’s pockets.   

Other factors such as rising interest rates and still high rates of inflation, notably for food, are also squeezing South African consumers. 

This point was underscored by the Beti read for February. Beti is a measurement of economic transactions between South Africa’s banks. After two consecutive months of growth, it declined by 1.3% on a monthly basis in February and was 1.9% lower than the same month in 2022. 

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“This notable moderation in Beti reflects the pressures that businesses in the country’s main economic sectors are experiencing from the prevailing dismal economic context: continuing load shedding, interest rates and inflation remaining at elevated levels, in addition to the global economic slowdown,” BankservAfrica, the largest automated payments clearing house in Africa, said in a statement. 

The one glimmer of hope was the 1.5% monthly retail trade sales rise, which mirrored the manufacturing and mining production data for the same month released earlier in the week. Those readings also showed annual declines but monthly increases.  

Read more in Daily Maverick: “SA mining, manufacturing data fall on annual basis in January, latest signs of economic stagnation” 

That means that on a monthly basis, mining and manufacturing output and retail trade sales all started the first quarter (Q1) of 2023 on a positive note, which in turn will feed positively into the gross domestic product number on a quarterly basis in the period. 

That will help to allay mounting concerns that the economy has fallen into a recession after it contracted by 1.3% in Q4 2022, which was a far worse outcome than economists had expected.  

But Beti and other data add to concerns that signs of economic growth could have faded since under the relentless onslaught of rolling power cuts and many other headwinds. The Absa Purchasing Managers’ Index, for example, contracted sharply in February to 48.1 from 53.0 in January.  

And it must be said that it sure feels like this economy is in a recession. DM/BM