● Distributive trade sales softened to a three-year low in October (5.0%; Sep: 5.6%)
- Slowdown observed across the board, indicating continued weakness in domestic demand, in line with our forecast of a more moderate economic growth in 4Q19 (4.0%; 3Q19: 4.4%).
- MoM: tepid expansion (0.6%; Sep: -3.0%).
● Moderation led by wholesale trade, followed by retail trade and motor vehicles
- Wholesale trade: slowed to over three-year low (3.9%; Sep: 4.7%) on softer growth in sales of household goods and other specialised products.
- Retail trade: moderated to 6.8% (Sep: 7.2%), as consumers retained a fiscally prudent behaviour, deferring purchases of discretionary goods, in line with the Malaysia Institute of Economic Research’s survey.
- Motor vehicles: edged lower to 3.7% (Sep: 4.4%) on lower growth of maintenance and repair activities, as well as vehicles sales.
● Softer retail trade performance across most advanced and developing economies
- EA: eased to an 11-month low (1.4%; Sep: 2.7%), dragged by poor performance in Germany and Ireland.
- JP: contracted at the fastest pace since 2016 (-7.3; Sep: 9.2%) as consumers reigned in spending following a sales tax hike from 8% to 10% on 1st October.
- CN: matched a 16-year low growth (7.2%; Sep: 7.8%) as sentiments among consumers dampened by bleak growth prospects.
● Projection for distributive trade sales in 2019 revised down to 5.7-6.3% from 6.5-7.5% (YTD: 6.0%; 2018: 8.2%)
- Revision reflects weaker-than-expected figure in October and higher base towards the final months of 2018.
- Concerns on negative spillover to wages from slowdown in major economies and continued trade disputes amongst multiple nations to weigh on domestic demand.
- Private consumption to soften to 6.5% in 4Q19 (3Q19: 7.0%), dragging the GDP growth to 4.0% (3Q19: 4.4%).
Source: Kenanga Research - 13 Dec 2019
Created by kiasutrader | Aug 26, 2024