‘Sentiment turning positive in the motor trade sector, particularly among new vehicle dealers, is a sign of improving consumer health.’
A survey by the Bureau for Economic Research (BER) has shown that retailer confidence has declined from 54% to 50% in the first quarter of 2025.
BER says the findings released on Tuesday suggest a slowdown in positive momentum; however, confidence remains 10% above the long-term average.
“Half of the retailers surveyed by the BER were satisfied with prevailing business conditions, which likely bodes well for retail sales and consumer spending at the start of the year.”
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Retail confidence
The survey references StatsSA’s retail trade sales data, which showed sales growth of 5.4% year over year in the fourth quarter of 2024.
“Growth was broad-based, driven primarily by semi-durable goods with a 7.7% year-on-year increase, followed by non-durable goods, up 6.5% year-on-year.
“This performance aligned with the upbeat sentiment of retailers in the fourth quarter and matched our expectations that lower inflation, stronger consumer confidence and two-pot withdrawals would boost spending.”
The BER’s retail sales volume index moved in the same direction as retail confidence in the first quarter but remained constant on a seasonally adjusted basis.
At eight index points, the seasonally adjusted retail sales volume index is at its highest since the fourth quarter of 2014.
“This points to further positive, albeit modest, year-on-year growth in retail sales for the first quarter of 2025 compared to the fourth quarter of 2024.”
A drop in confidence
The survey adds that wholesalers of both consumer goods and non-consumer goods saw a drop in confidence, matched by a decline in sales volumes and a deterioration of business conditions in the sector.
Respondents’ comments revealed concerns about US trade policy, which weighed on sentiment in this group.
Meanwhile, the confidence of new vehicle dealers improved significantly, from 29% to 52%.
“The bounce in confidence was supported by a solid improvement in the new vehicle sales volume index, driven by lower interest rates and two-pot retirement withdrawals (likely used for vehicle deposits).
“Sentiment turning positive in the motor trade sector, particularly among new vehicle dealers, is a sign of improving consumer health.”
Other sectors
BER says that although semi-durable goods retailers reported their highest confidence since before the global financial crisis, their confidence, combined with the improved sentiment among hardware retailers, was not enough to offset the decline in confidence experienced by retailers of non-durable goods and furniture.
When it comes to non-durable retailers, the sector saw a decline in confidence despite favourable sales volumes.
“However, this may be because our sample is biased towards smaller retailers facing less favourable conditions than larger grocery stores or supermarkets.
“Hardware retailers’ positive, forward-looking indicators align with some optimism about the second quarter reflected in the BER building survey.”
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