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Consumer Demand & Weak Rand Boost South African Retail Industry
Jun 20, 2007

South African retail sales increased by 13.6% in September 2006 year-on-year, as per the latest data from Statistics South Africa.

Consumer demand has been the key growth driver in South African economy in last few years, though demand is estimated to slow down, as interest rates are likely to rise. There are certain reasons for this steep increase.

September was the first month after the interest rates were increased in August. Growth in vehicle sales considerably declined in the month while the month's trade deficit reduced sharply. Further, credit demand regarding installment sales declined for second consecutive month. It is also believed that increase in consumers demand has been due to anticipation of further interest hikes by consumers.

These figures suggest a robust consumer demand in September & Reserve Bank of South Africa will welcome these numbers as a justification of raising interest rates in October.

Manufacturing volume rose by 7.5 % year-on-year in October from 2.1 % in September. Total sales value increased by 20.7 % on year-on-year basis & 14.4 % in September.

The physical volume of manufacturing in SA in October rose 7.5% on year-on-year basis from a revised 2.1% (1.9% ) in September, Statistics South Africa data released on Wednesday showed.

The reason for this rise is attributed to a weaker rand in October, resulting in potentially high exports. Experts have also attributed the rise to base factors, resulting in high growth rate.

Manufacturing industry is the second largest economic industry of South Africa & has reduced many jobs in recent times. The reason for this has been strong value of rand & arrival of cheap imports from China.

"Demand is driven by consumer confidence. Manufacturing industry is showing signs of improvement and therefore, more employment opportunities will definitely be created. That is surely a favorable sign for South African economy," said an analyst at
RNCOS.

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