Wholesale sector remains vibrant

Despite a slight speed wobble during September, South Africa’s wholesale sector is bound to break sales records during the last quarter of the year.

In line with a structural trend that also characterises retail trade, the wholesale sector usually starts each calendar year on a subdued note, but then dealers gradually build up steam, ending each year on a high note.

In 2023, the 2nd quarter was rather disappointing, but wholesale sales rebounded nicely in the third quarter, with each of the 12 groups of dealers recording positive quarter-on-quarter growth. In terms of growth rates, the stand-out performers were intermediate products, textiles & clothing, and jewellery.

Importantly, the second largest group, namely machinery & equipment, continued to record growth (also in real terms), which is a sign of progress with new capital formation.

The solid growth rate in the group for construction materials confirms the uptick in construction sector activity since mid-2023, as confirmed by stellar increases in the sector’s employment levels. Since April, a total of 156,000 new jobs have been created in construction.

The strong performance of wholesale trade sales in 2023 should inevitably manifest itself in record retail trade sales during the fourth quarter, especially as a result of the traditional shopping bonanza that accompanies Black Friday, Cyber Monday and the Christmas holiday season.

Consumption expenditure by households is the main driver of retail and wholesale business activity around the globe. In South Africa’s case, this dominant demand component represents more than 60% of GDP and the latest wholesale trade data suggests that positive real GDP growth will be achieved in 2023, despite South Africa’s challenges with energy and transport logistics.