Distributive trade sales growth grew at a moderate pace in September, with MoM growth slowed sharply. Sales value surged to a record high amid resilient domestic demand. 3Q23: overall, growth expanded, likely to support services and private consumption growth. While the growth of motor vehicles and retail trade slowed, higher sales in wholesale trade partly took up the slack
Motor vehicles have slower growth due to weaker monthly sales, as reflected by a contraction in MoM growth. This was also attributable to a moderate vehicle sale as reflected in lower unit sales (68.2k units; Aug: 71.7k units). Meanwhile, sales, maintenance, and repair continued in a contraction for six months. Wholesale trade expanded to a six-month high, driven by higher sales of agriculture, raw materials, live animals, and other specialised trade. These two sub-sectors contributed 1.9 ppts to the overall growth
Retail trade growth slowed due to a sharp slowdown in the sales of automotive fuel and sustained weakness in information and computer equipment. Nonetheless, growth was partially supported by sustained increases in food, beverages, and tobacco, reflecting a strong domestic demand partly backed by increased tourist arrivals.
Mixed retail sales performance across regional economies
− CN: rose to a four-month high (5.5%; Aug: 4.6%), beating expectations, boosted by the summer travel season.
− SG: slowed to an eight-month low (0.6%; Aug: 4.2%), weighed by a slowdown in the sales of expensive items.
− ID: expanded slightly to a four-month high (1.8%; Sep: 1.5%) driven by higher sales in other household equipment,
spare parts, and accessories, as well as food, beverages, and tobacco.
2023 distributive trade sales growth forecast maintained at 7.1% and to expand to 8.0% in 2024. Despite a slowdown in external trade, weighed by the uncertainty in the global economy and tighter financial conditions, domestic demand remains resilient, as reflected by solid distributive trade sales in 3Q23 (6.8%; 2Q23: 5.7%). Meanwhile, YTD sales growth grew 8.3% to RM1.2t compared to RM1.1t in the same period last year, backed by steady labour market conditions and recovery in the tourism-related subsectors.
Kenanga expects sales growth to remain positive in the coming months due to the festive holiday season and potential
rush in demand for big-ticket items ahead of the hike in sales and service tax (SST) to 8.0% from the current 6.0%.
This will support higher GDP growth in the 4Q23 at 4.5% from an estimated 1.7% in the 3Q23. Nonetheless, thehouse
maintains its 2023 GDP growth forecast at 3.5% – 4.0% (2022: 8.7%) and expects 3Q23 growth to slow amid tepid
manufacturing growth, specifically the export-oriented sector, and the effect of the high base last year.
