• Distributive trade sales growth expanded to 6.7% YoY (Jun: 5.4%), a two-month high, reflecting sustained growth amid solid domestic demand
  
  − MoM growth rebounded (2.1%; Jun: -1.3%) to a four-month high following a sharp contraction in the previous month.
  
  − Sales value (RM149.0b; Jun: RM146.0b): surged to a record high.

• Sharp expansion in motor vehicles and wholesale trade more than offset the slowdown in retail trade
  
  − Motor vehicles (12.2%; Jun: 2.0%): higher growth due to increased unit sales (71.7k units; Jun: 58.0k), with overall sales of motor vehicles rebounding sharply (14.0%; Jun: -3.4%) in value terms. Growth was also boosted by a slight expansion in maintenance & repair (10.5%; Jun: 10.0%) and higher parts & accessories (9.6%; Jun: 9.2%). These three sub-sectors contributed 1.4 ppts (Jun: 0.3 ppts) to overall growth.
  
  − Wholesale trade (5.5%; Jun: 4.0%): expanded, driven by expansion in sales of household goods (8.2%; Jun: 5.6%), followed by food, beverages & tobacco (8.1%; Jun: 6.7%) and machine, equipment and supplies (10.2%; Jun: 2.4%), which all three combined contributing 1.8 ppts (Jun: 1.2 ppts) to overall growth.
  
  − Retail trade (6.4%; Jun: 7.9%): growth moderated to a three-month low, due to slower growth in non-specialised stores (7.7%; Jun: 8.8%), followed by a sharp slowdown in other goods in specialised stores (6.6%; Jun: 12.6%), and other household equipment in specialised stores (4.6%; Jun: 7.3%). These three sub-sectors contribution to overall growth fell to 1.9 ppts (Jun: 2.5 ppts).

• Mixed performance of retail sales across regional economies in July
  
  − China: retail trade expanded (2.7%; Jun: 2.0%), slightly above the consensus of 2.6%, despite the weak economy.
  
  − Japan: slowed (2.6%; Jun: 3.7%) to a three-month low, below expectations of 2.9%.
  
  − Hong Kong: declined sharply (-11.8%; Jun: -9.7%) for the fifth straight month amid weak domestic spending.

• 2024 sales growth forecast maintain at 6.0% (2023: 7.7%)
  
  − We retain our distributive trade sales forecast, following a recent revision and our anticipation of sustained domestic spending in the coming months. Notably, year-to-date sales growth currently stands at 6.0% (Jan-Jun: 5.9%), matching our current target. While there is room for further expansion, particularly due to higher festive season spending by year-end and the positive impact of EPF’s Account 3 withdrawal, we maintain our outlook for now due to lingering downside risk, particularly from external factors.
  
  − Overall, we maintain our 2024 GDP growth forecast at 5.0% (2023: 3.6%) as domestic growth will likely be supported by sustained domestic demand. Nevertheless, we anticipate growth to moderate to 4.8% in 2025 amid the high base effect and as the economic activity normalises.

Source: Kenanga Research - 10 Sep 2024