DESPITE a slight recovery in confidence among retailers in the second quarter, trading conditions are not expected to improve in the second half and retailers should batten down.
The Bureau for Economic Research (BER) Retail Survey released yesterday showed that the confidence levels of retailers recovered slightly after reaching a five-year low in the first quarter of the year. But it said the first quarter's slump had been "sharp".
The bureau said confidence improved to 56 points after dropping to 52 in the first quarter, substantially down from 71 in the fourth quarter of last year.
Despite the slight improvement, the rest of the year is expected to be tough. ETM economist Russell Lamberti said further rate hikes were expected and fuel costs should continue to rise.
Retail sales fell for the second month in a row in April, despite expectations of a rebound. Slowing sales added to evidence that consumer demand, the economy's main growth engine, had slowed sharply in response to rising interest rates.
Sales lost 0,3% in April compared with the same month last year, after a revised annual fall of 1,5% in March -- all at constant prices, adjusted for inflation. That compares with forecasts for sales volumes to rise 1,8% as a result of more working days in the month.
BER has dropped its expectations of growth in household consumption expenditure to about 2,5% this year and under 2% next year, down from 7% last year and 8,2% in 2006.
The effects of slowing growth were expected to be most pronounced in the durable and semidurable goods categories.
Lamberti said that while sales had slowed there was still growth, and that investment in infrastructure would stimulate economic growth.
Retails sales, which account for 14% of the economy, were set to remain under pressure.
BER economist Linette Ellis said most retailers who took part in the survey expected conditions to worsen in the third quarter.
The improvement in second quarter confidence was ascribed to improved sales growth and profitability, compared with a particularly weak first quarter.
However, this could prove to be a temporary respite. She said food and fuel price hikes had continued to move upwards.
Original article in allAfrica.com
