Distributive trade sales increased for the sixth consecutive month in June to a 14-month high of 44.0% YoY on higher motor vehicle sales due to the impending expiry of sales and service tax (SST) exemption. Sales value (RM132.8b; May: RM129.5b): hit another record high due to a sharp rebound of 15.8% MoM in sales of motor vehicles. Consequently, the total sales value increased by 2.5% MoM (May: 1.2%)
According to Kenanga Investment, the improved performance was broad-based, propelled mainly by a quadruple-digit growth in vehicle sales, the fastest pace of increase since records began, partly due to last year’s low base effect. However, the ongoing global semiconductor shortages have continued to negatively impact deliveries. Wholesale accelerated to a 13-month high, driven mainly by a solid double-digit YoY growth in sales of household goods and other specialised items.
Retail trade jumped to its highest level since April 2021, supported mainly by higher sales of others in specialised stores and at non-specialised stores. Mixed retail trade performance across advanced and developing economies, US slowed marginally due to a moderation in sales at food services and drinking places. However, on a MoM basis, retail sales increased by 1.0%, exceeding expectations.
The improvement in Malaysia labour market and continued recovery in the domestic tourism industry may continue
to buoy the retail sector and propel double-digit sales growth in the next few months. However, the rising cost of living and the expiry of SST incentives on June 30 may impede consumer spending in 2H22. In line with the strong growth in the distributive trade sales in 2Q22, private consumption growth is expected to expand by at least 6.7% in 2Q22 (1Q22: 5.5%), leading to solid GDP growth of 7.7% in the 2Q22 (1Q22: 5.0%).