Car sales slowed down considerably
7.12.2016Company: Amcham
Retail trade dynamics decelerated in October, and they were slower even after being adjusted for working days. Car sales also witnessed a considerable slowdown. In our view, however, this was probably a one-off swing rather than the start of a new trend. The overall prospects of Czech retail sales remain positive.
Retail sales (adjusted for car sales) fell behind the market expectations and printed growth of only 2.0% yoy. After the working days’ adjustment (this October has one less working day), sales increased 3.1% yoy. Consumer habits of households remained similar to previous months, but the dynamics of spending were weaker. Given lower prices, households bought more fuels (+5.8% yoy) in October. Growing purchasing power also enabled consumers to spend more on expendable goods. In October, sales in this category increased 5.7% yoy. Food sales rose just 1.0% yoy. The biggest disappointment was in car sales. Their growth printed only 0.8% (after September’s 4.0%). In our view, this was more likely a one-off swing rather than the start of a new trend.
According to our expectations, the outlook for retail sales growth is positive. The unemployment rate remains close to historic lows, and the real wage growth dynamics are high, as well. In 3Q16, real wages increased 4.0%, while in nominal terms growth was 4.5% (by CZK 1,170).
The good results of retail trade should translate into GDP growth. Overall, household consumption should grow 2.4% in 2016, contributing 1.1pp into the GDP increase.
Tags: Economics | Finance |
