● Distributive trade sales increased for the sixth consecutive month in June to a 14-month high of 44.0% YoY (May: 19.6%) on higher motor vehicle sales due to the impending expiry of sales and service tax (SST) exemption
- Sales value (RM132.8b; May: RM129.5b): hit another record high due to a sharp rebound of 15.8% MoM (May: - 9.6%) in sales of motor vehicles. Consequently, the total sales value increased by 2.5% MoM (May: 1.2%).
- 2Q22 (25.3%; 1Q22: 8.6%): soared to its highest level on record, mainly due to a sizeable increase in retail sales.
● The improved performance was broad-based, propelled mainly by a quadruple-digit growth in vehicle sales
- Motor vehicles (1,642.8%; May: 20.1%): fastest pace of increase since records began, partly due to last year’s low base effect. However, the ongoing global semiconductor shortages have continued to negatively impact deliveries.
- Wholesale trade (19.3%; May: 11.7%): accelerated to a 13-month high, driven mainly by a solid double-digit YoY growth in sales of household goods (32.6%; May: 22.1%) and other specialised items (18.7%; May: 8.8%).
- Retail trade (38.4%; May: 29.2%): jumped to its highest level since April 2021, supported mainly by higher sales of others in specialised store (44.3%; May: 30.8%) and at non-specialised stores (38.4%; May: 36.3%).
● Mixed retail trade performance across advanced and developing economies
- US: slowed marginally (10.6%; May: 11.2%) due to a moderation in sales at food services and drinking places (13.4%; May: 17.6%). However, on a MoM basis, retail sales increased by 1.0%, exceeding expectations (0.9%).
- SG: eased to 14.8% (May: 17.8%), mainly due to a sharp moderation in sales of computer and telecommunications equipment (0.1%; May: 4.2%) amid weakening consumer demand as core inflation rose to 4.4% YoY (May: 3.6%).
- CN: rebounded (3.1%; May: -6.7%) to its highest level since November 2021, as China's stimulus package helped fuel growth in sales of vehicle, cosmetics and communication equipment.
● 2022 distributive trade sales forecast retained at 15.0% (2021: 4.0%)
- The improvement in Malaysia labour market and continued recovery in the domestic tourism industry may continue to buoy the retail sector and propel double-digit sales growth in the next few months. However, the rising cost of living and the expiry of SST incentives on June 30 may impede consumer spending in 2H22.
- In line with the strong growth in the distributive trade sales in 2Q22, private consumption growth is expected to expand by at least 6.7% in 2Q22 (1Q22: 5.5%), leading to a solid GDP growth of 7.7% in the 2Q22 (1Q22: 5.0%).
Source: Kenanga Research - 12 Aug 2022
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