Data Highlights

• In August 2023, Malaysia saw a steady YoY growth of 5.0% in its Distributive Trade Index (DTI), pushing the index to 152.8 points. Simultaneously, the MoM DTI growth also showed a rise of 1.9%. 

• At the same time, Malaysia's Distributive Trade Sales demonstrated an expansion, with an annual growth rate of 6.7% (2.0% MoM), equating to a total value of RM142.5bn during the month. 

• Namely, volume index for Retail Trade index rose by 3.8% YoY to 172.8 points (Jul23: 2.7% YoY), owing to the high consumption demand, which probably due to the normalisation from interest rate effect and moderated inflation pressure. Also, we believe that the improved labour market conditions to date have been one of the reasons why spending sustains its growth. In addition, the wholesale trade index, which is the largest contributor of the DTI registered an increase of 6.1% YoY to 140.3 points vs. Jul23’s 6.6% YoY. Meanwhile, Motor Vehicles increased by 8.7% YoY to 136.1 points, compared with 20.4% gain in the previous month. 

• Value wise, Retail Trade registered an increase of 6.3% YoY totalling RM60.5bn followed by Wholesale Trade (RM63.9bn; 6.2% YoY) and Motor Vehicles (RM18.1bn; 9.7% YoY). 

• During the initial eight months, the DTI demonstrated an average YoY growth of 6.4%. Analysing the trend, the three-month moving average of the index showcased an 4.5% YoY expansion in August 2023, exhibiting a slight uptick from the previous reading of 4.4% YoY.

• Moreover, the current performance suggests an acceleration in the third quarter of 2023's Private Consumption Expenditure (PCE) in the real Gross Domestic Product (GDP). For the period of July-Aug, the DTI rose by 5.2% YoY, compared with 4.1% gain observed in 2Q23. This inference arises from the strong correlation of over 95% observed between the DTI and PCE. 

• We have upheld our forecast for personal spending at 6.5% YoY for the current year, in contrast to the remarkable expansion of 11.3% observed in 2022. The domestic economy's reliance on private sector spending is supported by favourable labour market dynamics, manageable inflation, and the potential for increased consumer and investor confidence. These factors collectively contribute to a positive outlook for continued economic growth.

Source: TA Research - 13 Oct 2023