Malaysia's Distributive Trade Index (DTI) grew by 3.9% YoY in November 2024, reaching 158.8 points. This marked a slowdown from the 5.1% YoY growth recorded in the preceding month. On a month-on-month basis, the DTI contracted by 0.8%, reversing the 1.2% MoM gain in October 2024. Similarly, Malaysia's Distributive Trade Sales registered a modest 4.7% YoY growth (-0.5% MoM) to RM149.3bn, easing from the 5.5% YoY increase recorded in the prior month.
By subsegments:
The Volume Index for Wholesale Trade, holding the largest share of the total distributive trade at 44.9%, registered a growth of 4.7% YoY (Oct24: 6.1% YoY) increase to 145.5 points.
The Retail Trade sector experienced a 4.1% YoY growth, reaching 181.7 points. This is as compared with 5.0% YoY recorded in October last year.
In addition, the volume index of Motor Vehicles registered a modest growth of 0.2% YoY (Oct24: 1.6% YoY) to 134.5 points. On a MoM basis, this segment decreased by 3.1%.
During the period of October to November 2024, the DTI rose by an average of 4.5% YoY, driven by strong performance in the wholesale trade segment, which increased by 5.4% YoY. Retail trade followed closely with a growth of 4.6% YoY, while the motor vehicle segment recorded a modest gain of 0.9% YoY. Looking ahead, the performance in December is expected to benefit from the festive season effect, a period typically characterized by resilient consumer spending. Over the past five years, December has seen an average month-on-month (MoM) increase of 2.5%, notably higher than the average MoM changes of -0.1% in November and 1.5% in October.
11M24, the DTI registered an average YoY increase of 4.4%. Analysing this trend, the three-month moving average of the index in November 2024 showed a 4.2% YoY expansion, reflecting a slight acceleration from the previous average of 4.1% YoY.
This consistent growth in the DTI indicates that personal spending will remain a key driver of overall GDP growth in the fourth quarter. Consequently, we maintain our forecast for personal spending growth at around 5.0% YoY in 4Q24, a slight improvement from the 4.8% YoY growth recorded in 3Q24. However, the overall GDP performance will also be influenced by other sectors, including external demand, manufacturing, and the mining index, among others. As noted in our previous analysis, we expect overall growth to moderate due to external headwinds.
For 2025, private consumption is expected to remain the primary driver of growth (TA Forecast: 6.3%), supported by a resilient labour market, stable income expansion, and contained inflation. Consumer spending is likely to receive an additional boost from higher civil servant salaries and increased tourist arrivals, particularly benefiting the retail, food, and leisure segments. Nonetheless, the rationalization of the RON95 fuel subsidy may pose challenges by raising fuel costs and reducing disposable income, especially among lower- and middle-income households. The overall impact will hinge on the timing and scale of subsidy adjustments, as well as the effectiveness of targeted financial aid programs aimed at protecting vulnerable groups. Even so, robust consumer confidence and policy initiatives geared toward household spending are expected to sustain private consumption growth in the years ahead.
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