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News

Retail sales stumbled, but it should flourish at the end of the year

7.12.2017
Company: Komerční banka, a.s.

October’s retail sales statistics (excluding car sales) disappointed when they increased only 6.3% yoy. Yet, the growth structure remains favourable. The sales of fuels and other non-food goods (especially electronics, sport and recreation) report sound dynamics. Households are thus spending on non-essential goods. October’s disappointing statistics will be soon forgotten when November and December show that households are not afraid to spend.  

Retail sales growth (excl. cars) did not surpass even the most pessimistic market forecast when it printed 6.3% yoy growth. Moreover, this October had two more working days, which even inflated the growth figure. After a calendar adjustment, the dynamics showed only 3.9%. In the mom comparison, the sales dropped 1.6%. Yet, we think of it only as a one-off shortfall as households’ situation remains more than favourable. 

The retail sales growth structure remains favourable. After calendar adjustment, the fuel sales increased 6.1% yoy and other non-food sales grew 5.1%. The impediment are food sales, which added only 2.1%. Among the non-food sales, we see an increase of expenditures on electronics, sport, leisure and culture, in particular. This shows that consumers are not afraid to spend on non-essential goods.

Retail sales (ex. cars) will show favourable dynamics despite October’s stumble. Growing employment and increasing wages strongly support the purchasing power of households. The total wage bill increased sound 8.8% yoy in the third quarter. Such dynamics will propel into households’ spending appetite, especially on goods they do not necessarily need. The effect of growing wages should override the impact of growing prices, which would under different circumstances impede the sales. We believe that it will be apparent during Christmas, which should be even more generous than usually. The retail sales in the last two months will print strong figures. Overall, we expect retail trade to add 5.5% on average this year, while in the next year the positive trends are set to intensify with sales increasing 6.4%.

Tags: Finance | Economics |

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