Bimb Research Highlights

Author: kltrader   |   Latest post: Wed, 6 Nov 2019, 4:40 PM


Economics - Distributive Trade Hit Another New Record High

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  • Distributive trade grew 5.1% mom and 6.8% yoy in May
  • Sales value exceeded RM110.0bn in May
  • Stronger growth underpinned by positive growth in sales value for all subsectors
  • Growth in global retail sales remained soft
  • Retail sales to remain on upward trend

Distributive trade continues to register a new record high of RM114.2bn in August, accelerated by 5.8% yoy. Wholesale and retail trade which accounted for the largest share of total distributive sales continued expanding but at moderating pace of 6.3% yoy and 6.7% yoy respectively. The 6.7% yoy (Jul: 7.1%) growth in retail sales was the smallest gain in almost 4 years. However, sales of motor vehicles sales rebounded to positive growth of 1.1% yoy following two consecutive months of negative growth offset the slight moderations observed in wholesale and retail hence causing the total distributive trade growth to inch upward to 5.8% yoy.

On monthly basis, sales value of wholesale & retail trade increased RM1.7bn or 1.4% after registering a 0.2% growth in July as sales value for wholesale trade recorded positive growth but was dragged by lower sales in retail and motor vehicle. Sales of wholesale trade increased 3.3%, recovered from -2.3% mom in July. However, monthly sales of retail trade and motor vehicles registered a marginal declined of 0.2% and 0.1% respectively (July: +1.1% and +7.1% respectively) .

Global retail sales lose steam

Singapore’s retail sales environment continues to contract in August as retail sales fell 4.1% yoy, marking its seventh consecutive month of contraction. Excluding motor vehicles, retail sales fell by a more modest rate of 1.0% yoy. Accounting for the latest data, Singapore retail sales have contracted 2.6% in the first eight months of 2019. Retail sales in Indonesia advanced 1.1% yoy in August, down from a 2.4% rise the previous month. August’s reading was driven by greater sales of food, vehicle parts and household equipment, although the fuel and recreation sectors weighed on sales. Retail sales in the US surged to 1-year-high of 4.1% yoy. The growth has been trending upwards for the past three months, partially attributable to rate cut. China's retail trade rose by 7.5% yoy in August, the least since April, following a 7.6% growth in the previous month. Meanwhile, Japan's retail sales rose 2.0% yoy in August, reversing a 2.0% fall in the previous month. There was a rebound in sales of most products while sales of motor vehicles continued to increase at a solid pace

Retail sales to remain on upward trend

Distributive trade grew by 6.1% in 2Q19, slightly moderating pace when compared to 6.6% yoy in 1Q19. Retails sales had slowed somewhat in the first two month of 3Q19 but, looking ahead to 3Q19, we foresee a continuous positive performance in distributive sales underpinned by low inflation, stable job market and supportive monetary policy changes such as the OPR cut and stable retail fuel prices.

According to Retail Group Malaysia (RGM), Malaysia's retail industry reported a growth rate of 4.5% yoy in retail sales in the 2Q19, below the 5.5% expected as uncertain economic prospects due mainly to external factors had discouraged Malaysian consumers to buy more. However, RGM maintain their positive outlook on their businesses and estimate an average growth rate of 3.2% during 3Q19. Retail industry performance continues to be affected by both internal and external market environment. Within the country, slow economic momentum and limited policies to stimulate consumers' spending hamper the growth of retail stores. Trade disputes among major economies led to slower export growth, declining stock market performance and weakening local currency. All these resulted in low consumers' confidence level, uncertain future job prospects and unwillingness to spend more. Given these factors, RGM has maintained a retail growth rate of 5.8% in 4Q19 and forecasts a growth of 4.4% for the full year.


Source: BIMB Securities Research - 14 Oct 2019

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