Bimb Research Highlights

Economic - Robust Consumer Spending in March

Publish date: Fri, 10 May 2024, 04:47 PM
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Bimb Research Highlights
  • Malaysia’s Wholesale & Retail Trade for 1Q 2024 registered RM429.2bn, an increase of 5.4% YoY
  • Strong consumer spending supported global retail sales
  • Resilient consumer demand to support retail spending growth momentum

Malaysia’s Wholesale & Retail Trade recorded the highest monthly sales value amounting to RM145.7bn in March, with first quarter 2024 registered RM429.2bn. The positive growth was contributed by all sub-sectors.

Sales of retail trade registered a growth of 7.1% YoY or RM4.2bn to register RM62.8bn. Growth was contributed by Retail Sales in Non-specialised Stores which grew 8.4% (Feb: 6.7%) or RM1.9bn to RM24.2bn. Other groups in this sub-sector also recorded positive growth namely Retail Sale of Other Goods in Specialised Stores (Mar: 10.9%; Feb: 9.5%), Retail Sale of Food, Beverages & Tobacco in Specialised Stores (Mar: 8.6%; Feb: 8.0%), and Retail Sales Not in Stores, Stalls or Markets (Mar: 6.3%; Feb: 1.0%). Wholesale trade sub-sector also expanded by registering 4.0% YoY or RM2.5bn to RM64.1bn. The increase was supported by Other Specialised Wholesale which rose RM1.0bn or 4.5% (Feb: 7.4%) to RM24.1bn. This was followed by Wholesale of Food, Beverages & Tobacco (Mar: 5.4%; Feb: 4.0%) and Wholesale of Household Goods (Mar: 3.5%; Feb: 3.5%). Sales value of motor vehicles expanded with a growth of 3.2% or RM0.6bn to settle at RM18.8bn. The increase was fuelled by Sales of Motor Vehicle Parts & Accessories which surged 13.8% (Feb: 13.7%) or RM0.6bn to record RM5.0bn, followed by Maintenance & Repair of Motor Vehicles which soared 14.4% (Feb: 14.1%). However, Sales of Motor Vehicles (Mar: -2.8%; Feb: 0.2%) recorded negative growth. Total Industry Volume (TIV) for March increased by 10.5% MoM to 71,052 units whilst on YoY basis, TIV edged down by 9.5%. The monthly TIV rebounded in March, spurred by Hari Raya promotional campaigns and the rush for deliveries from companies with FYE closing on 31 March 2024.

On a monthly basis, sales value of wholesale & retail trade increased 3.3%. The increase was contributed by Wholesale Trade which went up 3.0%. This was followed by Motor Vehicles and Retail Trade sub-sectors which grew 8.3% and 2.1%, respectively.

Malaysia’s Wholesale & Retail Trade for 1Q 2024 registered RM429.2bn, an increase of 5.4% YoY (4Q24: RM428.8bn, +5.8% YoY). The increase was underpinned by Retail Trade sub-sector which rose RM9.1bn or 5.1% to RM185.5bn. This was followed by Wholesale Trade which climbed 4.9% or RM8.8bn to record RM190.0bn. Motor Vehicle sub-sector also grew with 7.8% or RM3.9bn to reach RM53.8bn in 1Q24. As for quarter-on-quarter comparison, Wholesale & Retail Trade edged up 0.1%.

Strong consumer spending supported global retail sales

In the first three months of the year, a strong job market and wage gains helped buoy consumer spending. The global retail sales was notable not just for surpassing expectations but also for beating inflation, thereby representing true demand for goods. The increase in March retail sales, which is on top of the increase in February, demonstrates that consumers are still spending despite higher prices, interest rate increases and the uncertainty of the macroeconomic environment. Still, the picture for consumers remains tricky, so that the coming quarters may not have 1Q’s full throttle. Looking ahead, we expect that spending trends across categories will be mixed as consumers remain under pressure from various macro factors.

Rising inflation in March did not deter consumers, who continued shopping at a more rapid pace than anticipated. Retail sales in the US increased 0.7% MoM though below the upwardly revised 0.9% in February. Excluding auto-related receipts, retail sales jumped 1.1%, while the core control group, which strips out several volatile measures and is in the formula to determine gross domestic product, also increased 1.1%. Sales in March were boosted by a 2.7% acceleration in online receipts, which followed a 0.2% gain in February. On annual basis, retail sales increased 4.0% YoY, following an upwardly revised 2.1% gain in February. Eurozone retail sales in March surged, marking the highest increase since September 2022. Retail sales in the euro area advanced by 0.8% MoM in March. The rebound came after an upwardly revised decline of 0.3% in February, displaying promising signs of economic recovery in household consumption. Annually, sales grew by 0.7%, reversing a 0.5% contraction in February and marking the first positive annual rate since September 2022, the highest since May 2022. Retail sales in the UK unexpectedly stalled in March as consumers cut back on spending because of the cost of living.

British retail sales stagnated at 0% in March after an increase of 0.1% in February despite high inflation easing recently, representing the first time that they have not grown in monthly terms since December. On an annual basis, sales rose 0.8% following a revised 0.3% decline in the previous month.

Meanwhile, retail sales across Asian economies were mixed. Retail sales in Japan rose 1.2% YoY in March, slowing significantly from an upwardly revised 4.7% gain in February. Still, it was the 25th consecutive month of expansion in retail sales as consumption in Japan continued a healthy streak. On a monthly basis, retail sales declined 1.2% in March, reversing from a 1.5% gain in February. Singapore’s retail sales declined by -1.0% MoM in March (Feb revised higher: 3.1%), translating to a slightly underwhelming 2.7% YoY increase (Feb revised higher: 8.6%). Excluding motor vehicle sales, retail sales posted a - 0.3% MoM fall, translating to a smaller 2.0% YoY uptick, following a very robust 9.5% YoY in Feb. For 1Q24, retail sales posted a commendable 4.1% YoY uptick, the best quarter since 1Q23 (4.6%). Retail sales growth in China slowed to 3.1% YoY in March (Jan-Feb: 5.5%), with 1Q24 at 4.7% YoY. However, the MoM growth picked up to 0.26% in Mar after remaining flat in the two preceding months.


Malaysia's distributive trade remained resilient with growth of 5.2% YoY in March while on a month-on-month basis, distributive trade returned to positive growth and climbed 3.3%. Meanwhile, Malaysia’s retail sales grew 7.1% YoY, accelerating from a five-month high of 5.8% rise in February. It marked the highest reading since April 2023 and on month-onmonth basis retail sales grew 2.1%. The strong consumer spending was also supported by robust labor market conditions, with the unemployment rate remained at pre-pandemic level of 3.3% since November 2023. The stronger consumer spending was also reflected in the performance in online retail sales which expanded 5.6 YoY in March (Feb: 0.4%; Jan: - 1.6%). For seasonally adjusted value, the index increased 5.0% as against the previous month.

Overall, Malaysia’s consumer demand remained resilient and is in tandem with the healthy job market development and softening inflationary pressure. The value of total retail sales remained above RM60bn for eight consecutive months, alongside the revival of inbound tourism. Tourism in Malaysia is on the rise, as the country welcomed 5.8mn foreign tourists, a substantial 32.5% increase compared to last year’s 4.3mn, fuelled by visitors primarily from Singapore, Indonesia, China and several other countries. The 30-day visa exemption for Chinese and Indian tourists has boosted arrivals in Malaysia, along with the weaker ringgit, which make the country’s tourist products cheaper and more attractive for budget travellers. The Ministry of Tourism, Arts, and Culture anticipates tourist arrivals in Malaysia to reach 27.3mn, with an expected income of RM102.7bn, in 2024. Malaysia is aiming to attract approximately 36mn tourists and generate RM150bn by Visit Malaysia 2026 (VM2026)

Looking ahead, we expect retail sales growth to be driven by strong domestic demand, supported by a stable and lower unemployment rate. This positive outlook is reinforced by the continued increase in tourist arrivals and spending. However, risks to our forecast include the impact of subsidy rationalisation, which could potentially dampen consumer spending and subsequently affect sales growth.

Source: BIMB Securities Research - 10 May 2024

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