Retail slightly up in November; likely due to short-term factors

The retail turnover in November (seasonally adjusted data at constant prices) grew 1.9% month-on-month. The year-on-year retail sales growth was 7.6%. A substantial month-on-month growth was posted for the sales volumes of non-food products (2.5%), with the growth fastest for the furniture, household appliances and construction materials group (4.3%).

The drop observed in October was expected to have been a turning point in the hitherto rapid growth as the global developments and events in the Latvian financial sector seemed to urge caution to households. Yet growth has apparently resumed.  The suspension of AS "Latvijas Krājbanka" operations and the clamour surrounding AS "Swedbank" problems provoked the population to withdraw cash. These cash withdrawals may have promoted increased expenditures, especially regarding goods that can be kept for a longer time. For three days in November, every AS "Krājbanka" customer was allowed to withdraw 50 lats in one day. The payouts of guaranteed amounts were begun on 29 November, so there were additional two days in November when bigger amounts could be withdrawn. Moreover, these events may have provoked uncertainty regarding the banking system as such, leading to the customers of other banks possibly reducing and spending their accruals. Albeit this effect could be of more significance in December when substantially larger sums were withdrawn, the impact on November sales data cannot be excluded and a more rapid growth in the demand for furniture, household appliances and construction materials could confirm this.

In contrast to October when automobile sales, accounted for outside of retail turnover, grew "cushioning" the drop, in November they acted to worsen the performance of the trade branch.  Month-on-month, automobile sales dropped 7.0% in November and thus total retail, those included, dropped 0.4%. It must be noted that the fluctuating automobile sales data are to a large extent affected by larger-size transactions, such as the renovation of legal persons' fleets.

What to expect for retail in December? Business and consumer confidence indexes cannot be used for short-term predictions of retail and consumption at this time. The employees of the European Commission have gone on their holiday, therefore these data will become available not at the end of the month as per usual, i.e. before or along with commentaries on sales data but only on 6 January.  Better late than never! Yet the second wave of the crisis is already lapping at our feet. The trend of resumed retail turnover has not yet suffered to any great degree but in all likelihood it is due to the above short-term factors and in the coming months their impact will dissipate.

The best wish for the New Year is that it be stable for 2012 does not seem to bode well for more rapid growth. The gray economy remains a big unknown, which may emerge as a surprise in both the behaviour of the population and in the relevant statistics. 

APA: Rutkovska, A. (2022, 27. may.). Retail slightly up in November; likely due to short-term factors. Taken from https://www.macroeconomics.lv/node/2266
MLA: Rutkovska, Agnese. "Retail slightly up in November; likely due to short-term factors" www.macroeconomics.lv. Tīmeklis. 27.05.2022. <https://www.macroeconomics.lv/node/2266>.

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