July retail trade sales registered the fifth consecutive positive reading for 2017, expanding 1.8% y/y (unadjusted) from an upwardly revised 3.2% in June. In fact, all of the second quarter numbers were revised higher, but it remains to be seen whether this will have any impact on the quarter’s GDP numbers when they are next released.

Nevertheless, the 1.8% y/y increase (-0.6% m/m) is an encouraging start to the first quarter, driven largely by a 12.4% increase among “other retailers” which are composed of book stores, stationers, jewelers, sporting goods retailers and trade in second hand goods. Anecdotally, we understand that trade in second hand goods have experienced a significant boost (much as second hand vehicle trade has) from the difficult economic conditions, but it’s not possible to distinguish from the data whether this sub-component was a significant contributor.

Food and beverage retailers expanded 7.1% y/y, adding 0.6 ppt, while pharmaceutical sales bounced 5.1% after a contraction in June. Clothing, furniture and hardware sales all contributed positively, expanding 1.2%, 6.8% and 2.8% respectively, but the headline number was held back by a 3.2% y/y contraction in general dealer sales which make up just over 40% of sales.

With the recent interest rate cut and the potential for another one this year, as well as a relatively benign inflation backdrop, there does appear to be some consumer relief on the horizon. We maintain, however, that this relief will likely be short-lived as tax revenue shortfalls will have to be bolstered by further tax hikes in the new year.