Johannesburg - June`s retail sales dropped 1,5 percent from May, confirming consumers` low confidence in the economy, according to data released by Statistics South Africa yesterday.
Seasonally adjusted retail sales figures declined 1,9 percent from June 1998 and dropped 0,6 percent for the quarter to June from the previous quarter.
Stats SA said 12 of the 20 merchandise categories reflected decreases for the second quarter. Sales in household furniture and hardware decreased by 4,3 percent each.
Analysts said the figures confirmed the recent credit demand and M3 money supply data. They expected the effects of Old Mutual`s demutualisation to boost the next set of figures.
But Nico Czypionka, an economist at SG Frankel Pollak, said consumers had probably paid off their debts with funds from Old Mutual. "It`s unreasonable to expect a vigorous recovery with individuals as pinched as they are."
The outlook, he said, was not good. Lower interest rates and some decrease in individuals` debt burden would only translate into retail sales if confidence was given a boost. In the current environment of unemployment, this was not likely to happen soon and a rise in retail sales was not imminent.
George Kershoff, an economist at the Bureau for Economic Research, said the quarterly figures showed a bottoming out in sales volumes.
"They confirm the expectation that in the second half of the year we can see small positive growth rates in sales volumes," he said. - Cathy Powers