SA retail trade sales surprisingly surge in June, signalling economy probably averted a recession

South African consumers hit the shops in June and beat the winter blues with a dose of retail therapy. 

Data unveiled on Wednesday by Statistics South Africa show retail trade sales in June grew by a larger-than-expected 4.1% on a year-on-year basis, exceeding a Bloomberg consensus forecast of just 1.0% growth. 

On a monthly basis, sales increased by 1.6% in June compared with May when they dipped 0.2% from April. It all adds up to a seasonally adjusted rise of 1.5% in the second quarter (Q2) of 2024 compared with Q1.



This means retail trade will make a mildly positive contribution to the Q2 gross domestic product (GDP) read, and is probably enough to avert a recession – defined as two consecutive quarters of economic contraction – after the economy shrank 0.1% in Q1.

But the general view is that growth was very weak in the quarter and the best that can be said is that the dreaded “R” word was avoided. 

The relative splurge by consumers in June is probably a reflection of the fact that it was the third consecutive month without rolling national power cuts and the lift to confidence that came with the formation of the Government of National Unity.

There was also a nice fall in the petrol price at the pumps in June, which gave many consumers a bit of extra cash to spend. 

“Year-to-date retail sales are up by 0.9% compared with the same period last year. Data suggest that these gains have all come from the last three months. This coincides with the load shedding cessation since March, a substantial petrol price cut in June, as well as the post-election improvement in sentiment,” FNB Senior Economist Siphamandla Mkhwanazi said in a note on the data. 

Looking ahead, consumer confidence should get a boost from domestic interest rate cuts that could commence in September, and the gradual slowdown in inflation. If rates start falling as expected, inflation maintains its slowing trajectory and Eskom keeps the lights on, retailers at the end of the year may have some Christmas cheer. DM