South Africa Retail Sales Drop Again Even as  Lockdown Eased

(Bloomberg) --

South African retail sales dropped for a third straight month in June even as the lockdown restrictions that limited the operation of stores and the types of goods that could be sold were eased.

Sales fell 7.5% from a year earlier, compared with a revised 11.9% decline in May, Pretoria-based Statistics South Africa said Wednesday in a report on its website. The median estimate of seven economists in a Bloomberg survey was for a 5% drop.

Key Insights

• Despite the smaller contraction, the sector will weigh on total output in the second quarter, with sales that dropped 22.8% from a year earlier. Retailers will continue to face a tough environment. A sub-component of the consumer confidence index that measures the appropriate time to buy durable goods plunged to a record low in the second quarter, signaling an extreme wariness to purchase vehicles, furniture and household appliances.
• South Africa implemented a nationwide lockdown from March 27 to curb the spread of the coronavirus. The government started a gradual and phased re-opening of the economy on May 1 and restrictions were eased to so-called level 3 a month later. That allowed most businesses, including retail outlets, to resume operations under strict conditions.
• Food, beverage and tobacco sales dropped by 11% from a year earlier, compared with a revised 32.1% decrease in May. The sale of tobacco products has been prohibited since the start of the lockdown and the government reinstated a ban on alcohol sales from July 13. The restrictions are weighing on state finances and contributed to an under-recovery of 82 billion rand ($4.7 billion) in the first three-and-a-half months of the fiscal year, according to Edward Kieswetter, the commissioner of the South African Revenue Service.

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