With a flurry of festive season spending, retail sales increased sharply during December. The annual rate of decline in total sales moderated to 3,7% y/y from a decline of 6,6% in November. However, the figures confirm sentiment from retailers that festive season sales were under pressure despite low interest rates. The sector has shed 291 000 jobs over the course of 2009, leading analysts to say that it was the worst year to date for retailers.
A significant improvement was recorded in sales of furniture & appliances, which increased by 2,3% y/y following persistent declines throughout 2009. The pharmaceutical & medical goods, cosmetics & toiletries category rose by 1,1% y/y. Sales in the other areas contracted in December. However, the pace of decline is less than in previous months.
A sustained recovery in retail sales will depend on the speed of recovery in household demand. Lower interest rates have provided some relief, but have not stimulated spending by as much as economists hoped.
Sales are expected to improve, but will gain momentum only in the second half of 2010. Higher numbers of foreign tourists during the soccer World Cup will provide the sector with a boost.
Razina Munshi
120,9 points. The Reserve Bank's leading indicator of economic activity rose by 13,1% y/y in December, up from 10,7% in November. It tends to lag the global economic cycle by a few months.
7,2 percent. The budget deficit for 2009/2010 is estimated at R748,8bn, or 7,2% of GDP. High public spending and lower revenue will keep the deficit at lofty levels for this fiscal year. Treasury aims to reduce it to 4,1% of GDP by 2012.
2,5 million jobs. Government's new industrial policy action plan, which is aimed at boosting the country' s industrial sector and improving long-term manufacturing capacity, is expected to create 2,5m jobs over the next 10 years.
The price of gold jumped to a one-month high on Monday as the rally in the US dollar stalled on speculation that the US Federal Reserve may remove emergency stimulus earlier than initially anticipated. Over the past month, the dollar advanced more than 2% against a basket of currencies as investors fled riskier assets for safe haven assets. Investment demand in the SPDR Gold Trust, the world's largest gold exchange-traded fund, has fallen 2,3% this year after rising 45% in 2009.
The price of oil increased steadily over the past week, with Brent crude hovering below the US$80/bbl level at the start of the week. Last Thursday, the US Federal Reserve hiked its discount rate for the first time in three years amid a recovery in the world's largest economy. Speculation that energy demand will pick up has prompted a rise in investor demand for riskier assets, including commodities. Speculative net-long positions jumped 63% in the week ended February 16, the first weekly increase in over a month.
The price of Richards Bay coal has rallied considerably, up nearly 21% from lows reached last year. Even though prices have eased somewhat in recent weeks, the market still expects the coal price to remain resilient with the coldest US winter in nine years and China's record imports continuing. The Asian economy imported 16,4 Mt in December, a six-fold increase year on year.
Ranking the Analysts 2009
