News

Retail trade decelerated despite surging consumer confidence

September’s retail trade dynamics decelerated despite growing consumer confidence. Retail sales (adjusted for car sales) increased 4.7% yoy, which still represents a pretty sound result despite some deceleration. Household purchases were supported by declining unemployment, wage growth and a stable economic outlook. 

Retail sales (adjusted for car sales) surprised the markets when their growth printed only 4.7% yoy. The statistics once again confirmed that households buy more fuels (+7.6% yoy). Expenses also grew strongly in the non-food sectors (+4.7% yoy). The statistics endorse the view that households’ purchasing power strengthens as they spend mostly on expendable goods. This is also visible in food sales, which printed weaker growth figures (+3.6% yoy) despite record yoy price declines.

Car sales dynamics slowed down notably. Their growth printed only 4.0%. This represents the slowest dynamics since November 2014. However, we cannot draw any severe conclusions. Car sales statistics show significant volatility, and their double-digit dynamics have not been sustainable in the long term.

Consumer confidence has recorded improvements in recent months. This suggests retail trade growth will continue in the coming months. Households have reason to remain optimistic. The unemployment rate remains close to its historic lows, and wage growth reported its highest figures since 2009. The overall wage bill thus grows and transforms into increasing retail sales. However, a significant part of this goes into investments in residential housing. Housing prices have accelerated massively this year, and thus we believe it is not as tempting an investment as it was at the beginning of the year. More funds will thus be left for consumption.     

The good results of retail trade should translate into GDP growth. We expect that after the stumble of household consumption in 2Q, the third quarter will again show an acceleration. Overall, household consumption should grow 2.4% in 2016, contributing 1.1pp to the GDP increase.