Based on the latest Distributive trade data, sales growth slowed slightly in November due to base effect, as MoM growth rebounded marginally following a contraction in the previous month.
Sales value expanded slightly near a record high in September. Slower motor vehicle sales in November, but partially supported by higher sales in wholesale and retail trade. Motor vehicles: moderated due to a slower increase in vehicle sales in line with a lower unit sales during the month. Wholesale trade: growth expanded thanks to higher sales of agriculture raw materials & live animals and other specialised, with combined contribution to overall growth expanded to 1.9 ppts.
Retail trade expanded due to higher sales of non-specialised stores and others in specialised stores. Both combined contributed 1.4 ppts to overall growth.
Kenanga also pointed to positive retail sales performance across regional economies in November due to festive year-end sales. China: rose to a six-month high in November (10.1%; Oct: 7.6%), partly due to the lower base effect last year. Singapore: retail sales excluding motor vehicles rebounded (2.5%; Oct: -0.1%) to a three-month high, contributed by food & alcohol, motor vehicles, and watches & jewellery amid year-end shopping sales. Hong Kong: rose sharply (15.9%; Oct: 5.9%) to a four-month high attributed to the revival of inbound tourism as reflected by the surge in sales of alcoholic drinks & tobacco, jewellery, watches, clocks & valuable gifts and clothing.
Overall 2023 distributive trade sales growth may slightly exceed Kenanga’s target of 7.1%, and projects sales growth to expand to 8.0% in 2024. YTD distributive trade sales grew 7.9% to RM1.5t, as resilient domestic spending thanks to steady labour market conditions and higher tourist arrivals bolstering tourism-related sub-sectors. This is expected to be sustained in the near term as it projects the unemployment rate to decline further to 3.3% in 2024 from an estimated 3.5% last year
while supported by continued fiscal spending by the federal government. The anticipation of a gradual recovery in the external sector on the back of China’s post-pandemic recovery will also be the major growth driver.
The house keeps the 4Q23 GDP growth target unchanged at 3.7%, with the overall 2023 GDP growth expected to settle at 3.5% – 4.0%. Growth will likely sustain its momentum in the near term, as we project it to expand to 4.9% in 2024, barring any unforeseen shock to the growth outlook it said.
