Wholesale Trade Falls 7.1% In January

23 March 2021 – Wholesalers have followed their retail counterparts as sales plunged into contractionary territory in January as lockdown measures depressed demand.

Data from Statistics SA (StatsSA) yesterday showed wholesale trade declined 7.1 percent in January compared with the same month a year ago.

The wholesale trade data print, which rose 1.8 percent in December, was dragged down by a 5.9 percent decline in dealers in solid, liquid and gaseous fuels and related products in January.

StatsSA said wholesale trade sales fell 0.6 percent in January on a month-to-month basis compared with a 2.1 percent increase in December 2020.

In the three months to the end of January, seasonally adjusted wholesale trade sales eased 0.2 percent compared with the previous three months.

However, sales of agricultural raw materials and livestock, and construction and building materials increased by 1 percent, respectively, in spite of the Covid-19 lockdown regulations.

Sales in construction and building materials rose from R8.9 billion in December 2020 to R10.5bn in January, with expansionary year-on-year growth of 45.1 percent.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) said the uptick in the sale of construction and building materials was encouraging.

The lockdown restrictions had a negative impact in the consumer market as retail trade sales also fell by 3.5 percent in January from a year ago.

Manufacturing output, overall, contracted by 3.4 percent and mining output declined sharply by 6.2 percent in January as the country was still under an adjusted level 3 lockdown.

Seifsa chief economist Chifipa Mhango said the increase was mainly driven by the steady easing of lockdown restrictions, which led to an increase in the demand for building supplies.

“As the economy opens up and more Covid-19 vaccines are rolled out, we anticipate further green shoots in the sale of construction building materials,” Mhango said.

“The rolling out of key government infrastructure projects to the total value of R791.2bn in public sector spending into the next three fiscal years is also good news, as we expect demand for construction and building materials to improve further.” Source (Business Report)