• Distributive trade sales growth held steady in October (6.5% YoY; Sep: 6.5%), but MoM growth fell slightly (-0.3%; Sep: 0.1%) for the first time in six months
  
  − Sales value (RM142.3b; Sep: RM142.7b): fell slightly, following a record high in the previous month.

• Higher growth in motor vehicle sales partially offset for the slowdown in retail and wholesale trade
  
  − Motor vehicles (19.1%; Sep: 7.0%): surged to a three-month high driven by increased vehicle sales (24.6%; Sep: 3.8%) as reflected in strong performance of unit sales (74.9k units; Sep: 68.2k units) which hit a seven-month high.
  
  − Wholesale trade (5.7%; Sep: 6.9%): growth moderated due to a sharp slowdown in food, beverages and tobacco (3.3%; Sep: 7.7%), with contribution to overall growth fell to 0.3 ppts (Sep: 0.7 ppts).
  
  − Retail trade (3.9%; Sep: 5.9%): growth slowed due to a sharp slowdown in the sales of non-specialised stores (6.1%; Sep: 8.9%) and others in specialised stores (2.2%; Sep: 5.5%). Both combined contributed 1.2 ppts (Sep: 1.9 ppts) to overall growth.

• Mixed retail sales performance across regional economies
  
  − CN: rose to a five-month high (7.6%; Sep: 5.5%), indicating a gradual recovery momentum in the consumption demand amid various policy support.
  
  − SG: retail sales excluding motor vehicles fell marginally (-0.1%; Sep: 0.8%) for the first time in nine months, weighed by a slowdown in the sales of recreational goods.
  
  − HK: moderated sharply (5.6%; Sep: 13.0%) to a 10-month low. Nevertheless, growth remained supported by inbound tourism, particularly attributed to higher tourist arrivals from mainland China.

• Overall 2023 distributive trade sales growth retained and may exceed our target of 7.1% (2022: 19.6%)
  
  − YTD distributive trade sales grew 8.1% to RM1.4t, mainly backed by a resilient domestic spending amid steady labour market conditions and recovery in the tourism-related subsector. This is expected to be sustained in the near term on the back of various policy support and acceleration in government spending. The solid domestic spending is expected to continue to support growth recovery despite persistent weakness in external trade performance.
  
  − With that said, we expect 4Q23 GDP growth to expand to 3.7% (3Q23: 3.3%), with the overall 2023 GDP growth forecast to settle within our target range of 3.5% - 4.0% (2022: 8.7%). In 2024, we anticipate growth to expand to 4.9% on the back of technology upcycle, a rebound in external trade, higher tourist arrivals, and strong labour market conditions.

Source: Kenanga Research - 12 Dec 2023