• Distributive trade sales growth slowed slightly in November (6.2% YoY; Oct: 6.5%) due to base effect, as MoM growth rebounded marginally (0.2%; Oct: - 0.3%) following a contraction in the previous month
  • Sales value (RM142.6b; Oct: RM142.3b): expanded slightly near a record high in September (RM142.7b).
     
• Slower motor vehicle sales in November, but partially supported by higher sales in wholesale and retail trade
  • Motor vehicles (12.7%; Oct: 19.1%): moderated due to a slower increase in vehicle sales (13.5%; Oct: 24.6%) in line with a lower unit sales (71.9k units; Oct: 74.9k units) during the month.
  • Wholesale trade (6.2%; Oct: 5.7%): growth expanded thanks to higher sales of agriculture raw materials & live animals (9.5%; Oct: 8.9%) and other specialised (9.3%; Oct: 7.5%), with combined contribution to overall growth expanded to 1.9 ppts (Oct: 1.6 ppts).
  • Retail trade (4.4%; Oct: 3.9%): expanded due to higher sales of non-specialised stores (6.5%; Oct: 6.1%) and others in specialised stores (3.7%; Oct: 2.2%). Both combined contributed 1.4 ppts (Oct: 1.2 ppts) to overall growth.
     
• Positive retail sales performance across regional economies in November due to festive year-end sales
  • China: rose to a six-month high in November (10.1%; Oct: 7.6%), partly due to the lower base effect last year.
  • Singapore: retail sales excluding motor vehicles rebounded (2.5%; Oct: -0.1%) to a three-month high, contributed by food & alcohol, motor vehicles, and watches & jewellery amid year-end shopping sales.
  • Hong Kong: rose sharply (15.9%; Oct: 5.9%) to a four-month high attributed to the revival of inbound tourism as reflected by the surge in sales of alcoholic drinks & tobacco, jewellery, watches, clocks & valuable gifts and clothing.
     
• Overall 2023 distributive trade sales growth may slightly exceed our target of 7.1% (2022: 19.6%), and we project sales growth to expand to 8.0% in 2024
  • YTD distributive trade sales grew 7.9% to RM1.5t, as resilient domestic spending thanks to steady labour market conditions and higher tourist arrivals bolstering tourism-related sub-sectors. This is expected to be sustained in the near term as we project the unemployment rate to decline further to 3.3% in 2024 from an estimated 3.5% last year while supported by continued fiscal spending by the federal government. The anticipation of a gradual recovery in the external sector on the back of China’s post-pandemic recovery will also be the major growth driver.
  • That said, we keep the 4Q23 GDP growth target unchanged at 3.7% (3Q23: 3.3%), with the overall 2023 GDP growth expected to settle at 3.5% - 4.0% (2022: 8.7%). Growth will likely sustain its momentum in the near term, as we project it to expand to 4.9% in 2024, barring any unforeseen shock to the growth outlook.

Source: Kenanga Research - 12 Jan 2024