• Distributive trade hits highest growth in almost two years

• Distributive trade and retail trade expanded by 9.6% yoy and 12.9% yoy respectively in April

• Malaysia’s retail sales was the highest among major economies

• Solid performance of distributive trade signals stronger domestic spending is in play

Distributive trade expanded by 9.6% yoy as sales value stood at RM92.8bn in April 2017 as compared to RM84.6bn a year ago. The strong growth was contributed by retail trade which grew 12.9% yoy in April this year. Distributive trade and retail trade growth for April was the highest since March 2015. As for other components of distributive trade, wholesale trade and motor vehicles increased by 8.6% yoy and 4.0% yoy respectively in April. However, on monthly basis, the distributive trade declined 4.8% in April (Mar: +7.6%). This negative growth was prompted by all components: retail trade (-3.6%); wholesale trade (-3.8%) and motor vehicles (-11.8%). The distributive trade for the first four month of 2017 expanded by 8.8% yoy (Jan-Apr 2016: 4.1%). supported by the increase in all components: retail trade (10.8%); wholesale trade (8.4%) and motor vehicles (4.4%).

Malaysia’s retail sales was the highest among major economies

Malaysia continued to be the best performer in retail sales in the ASEAN region by registering 9.6% yoy in April. Most economies recorded retail sales growth at moderate pace. Retail sales in Singapore rose 2.6% yoy in April, continuing its upward movement for the second month in a row after 2.0% rise in March while retail sales in Indonesia increased 4.2% yoy in April of 2017, at the same pace as in the previous month. As for the US, retail sales eased to 4.5% yoy from 4.8% while China’s retail sales, which increased by 10.7% yoy in April was slightly softer than March's 10.9%.

Solid performance of distributive trade signals stronger domestic spending is in play

Solid performance of distributive trade signals stronger domestic spending is in play and hence will drive Malaysia’s economy into better position in 2017 compared to last year. We opine positive economic activities, strengthening labour market and stable wage growth among factors that drive up distributive trade performance in the first four month of 2017. Hence, this will translate into high growth in private consumption and overall services sector. We expect Malaysia’s private consumption and services sector to grow by 6.2% and 5.7% respectively in 2017. Given the strengthening domestic spending coupled with stellar external sector performance, we opine Malaysia economy will be able to expand 5.0% in 2017

Source: BIMB Securities Research - 14 Jun 2017