● Distributive trade sales jumped 66.2% (Mar: 9.3%), the biggest YoY increase since records began, largely attributable to the low base effect, as last
   year’s Movement Control Order (MCO) weighed heavily on business operations and consumer activities

• Sales value (RM111.1b; Mar: RM112.8b): remained above the pre-pandemic level (Feb-20: RM109.0b) but fell 1.5% MoM (Mar: 4.4%) on renewed concerns over rising domestic COVID-19 cases and a decrease in spending in non-food sector during the month of Ramadhan.

● Broad-based sales improvement, driven mainly by a quadruple-digit YoY growth in motor vehicle sales

• Motor vehicles (1,551.3%; Mar: 40.7%): recorded a parabolic growth due to an extremely low base effect as April 2020’s car sales were almost non-existent. However, MoM sales growth fell (-7.9%: Mar: 34.6%) on global chip shortage.
• Retail trade (56.4%; Mar: 10.5%): expanded significantly due to higher sales of others in specialised stores.
• Wholesale trade (40.5%; Mar: 1.8%): climbed to a record high, largely due to increased sales of other specialised items (69.1%; Mar: -2.5%) and household goods (35.8%; Mar: 4.5%).

● Mixed retail trade performance across advanced and developing economies

• US: soared to a new record high of 40.6% (Mar: 20.1%) on improved demand as more people have been vaccinated in the US.
• UK: accelerated to a record high of 42.4% (Mar: 7.1%) as non-essential shops were allowed to reopen in April.
• CN: slowed to 17.7% from a 314-month high of 34.2% in March, indicating that China's economic recovery momentum is tapering as domestic consumption remained weak.

● 2021 distributive trade sales forecast revised down to between 6.0% to 8.0% from 8.0% to 10.0% (YTD: 12.7%; 2020: -5.9%) due to the implementation of a nationwide full-scale MCO

• The tightening of government measures starting from the implementation of MCO 3.0 on 6th May until the imposition of a full-scale MCO on 1st June is expected to drag retail sales down in the May-July period. However, starting from August onwards, retail sales are expected to pick up pace due to higher expected vaccination rollout, loosening of COVID-19 restrictions and further extension of the new vehicle sales tax.
• Thus, we have revised our 2Q21 private consumption growth to 13.3% (1Q21: -1.5%) from 16.1%. Consequently, 2021 GDP growth forecast has been revised down to 5.0-6.0% (2020: -5.6%) from 6.0-6.5% previously.

Source: Kenanga Research - 14 Jun 2021