November 14, 2018 / 11:54 AM / in a month

UPDATE 1-South Africa retail sales rise points to economic recovery

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JOHANNESBURG, Nov 14 (Reuters) - South Africa’s retail sales rose in September driven by increased sales in household furniture, appliances and clothing, data showed on Wednesday, the latest sign the economy was climbing out of a recession.

The recession has put pressure on President Cyril Ramaphosa as he tries to jump-start growth in Africa’s most industrialised economy by attracting investment.

South Africa is facing the prospects of rising debt, widening budget deficits, high unemployment and a halved growth forecast now seen by Treasury at 0.7 percent in 2018.

However, recent data shows the country could climb out of its first recession in nearly ten years.

The statistics office said on Wednesday that sales rose 0.7 percent year-on-year after rising 2.5 percent in August.

On a three-month basis, sales jumped 1.5 percent in the three months to the end of September compared with the same period last year. The household furniture and appliances category grew the most, showing a 10.9 percent increase.

Consumer spending accounts for 60 percent of gross domestic product (GDP) and is seen as a catalyst for economic recovery.

“The quarterly number is good, it’s the first expansion in two quarters and it will definitely boost third quarter GDP,” said economist at Nedbank Johannes Khosa.

“However the yearly number is disappointing. It reflects that consumers are still under pressure given rises in petrol prices, high debt, and confidence remains low due to difficulties in the job market.”

Last week data showed a 1.7 percent quarterly increase in manufacturing output. Third quarter GDP data is due to be released on December 4. (Reporting by Mfuneko Toyana Editing by James Macharia)

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