In retail, the growth in sales gains momentum and is not only stronger but also broader based, however, retail profitability is seemingly under pressure. In the wholesale sector, nascent recovery is taking shape. Wholesalers are signalling a marginal improvement in demand conditions though business confidence among wholesalers eases slightly.
In the motor trade, robust passenger car sales drive an overall recovery but commercial sales are weak. Overall, South African vehicle exports are much stronger than last year and sentiment among vehicle dealers is very positive.
Nxedlana expects the internal trade recovery to continue albeit gradually, supported by a gradual recovery in household consumption expenditure as the drivers are certainly healing and consumer confidence is at levels consistent with strong growth in household spending.
There has been a rapid moderation in inflation and the interest rates are at low levels that are likely to persist until 2H 2011. However, household indebtedness is still very high, credit extension is falling and the labour market remains sluggish although mitigated by strong wage growth. He expects GDP growth of between 3.0% and 3.5% in 2010 and in 2011 supported by a recovery in household consumption.
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