• Distributive trade sales expanded at a moderate pace in August (6.7% YoY; Jul: 7.1%), partly due to the high base effect recorded last year
  
  − Sales value (RM142.5b; Jul: RM139.7b): surged to a record high as MoM growth (2.0%; Jul: 0.9%) expanded to a five-month high.

• Slower growth in motor vehicles, but it was supported by growth expansion in wholesale and retail trade
  
  − Motor vehicles (9.7%; Jul: 19.9%): growth moderated sharply due to the high base effect recorded last year as MoM growth expanded solidly (2.0%; Jul: 0.9%). However, unit sales remained high (71.7k units; Jul: 63.7k units).
  
  − Wholesale trade (6.2%; Jul: 5.7%): growth expanded to a five-month high, led by growth in fee or contract basis (10.3%; Jul: 10.5%) and followed by food, beverages and tobacco (8.1%; Jul: 8.8%) albeit at a slower rate. The expansion was associated with higher growth in household goods (5.4%; Jul: 2.8%).
  
  − Retail trade (6.3%; Jul: 5.5%): expanded to a four-month high, led by food, beverages and tobacco (13.3%; Jul: 12.5%). Growth expansion was also attributable to higher sales in automotive fuel (8.9%; Jul: 5.4%) and other specialised store (5.7%; Jul: 4.6%).

• Retail sales expanded in August across regional economies
  
  − CN: expanded to a three-month high (4.6%; Jul: 2.5%) and beat expectations on sketchy signs of recovery.
  
  − SG: growth expanded to a five-month high in August (4.0%; Jul: 1.3%) on a broad-based recovery.

• 2023 distributive trade sales growth forecast maintain at 7.1% (2022: 19.6%)
  
  − Distributive trade sales continued to show a resilient demand in August, with YTD sales growth expanded by 8.5% to RM1.1t compared to RM1.0t in the same period last year. The performance was primarily attributed to resilient domestic demand, thanks to a steady labour market conditions and gradual recovery in the tourism-related subsectors. Moving forward, we expect sales growth to remain positive and to normalise, supported by a higher motor vehicle booking backlog (235k units) and a further increase in tourist arrivals. This will be further bolstered by the upcoming festive season period and the year-end holiday sales.
  
  − Likewise, we maintain our 2023 GDP growth forecast at 3.5% - 4.0% (2022: 8.7%), taking into account the impact of the global economic slowdown amid a higher interest rate environment in the advanced economies.

Source: Kenanga Research - 13 Oct 2023