RO: Retail sales up 0.5% q/q in 3Q24

Retail sales came in line with our expectations in September, with a monthly advance of +0.9%, corresponding to an acceleration in annual terms to +10.7% y/y vs +9.1% y/y in August. Our forecast stood at +0.8% m/m and +10.6% y/y. Strong non-food sales remain the growth driver of retail sales.

Looking at the third quarter, retail sales were up 0.5% q/q and 9.1% y/y from +1.4% q/q and +8.3% y/y in 2Q24. We continue to forecast retail sales growth at +6.5% in 2024 vs +1.9% in 2023. Labour market is strong, with rapid growth of real wages and lower unemployment rate in the first seven months of the year. Real wage growth is expected to remain strong until the end of the year which will most likely continue to be felt in retail sales numbers, especially non-food items.

Food sales were down by -0.5% m/m and increased +4.3% y/y in September, turnover for non-food items was up +1.3% m/m and +19.0% y/y, while sales of car fuel advanced by +2.5% m/m and by +4.5% y/y.

Retail confidence improved, reaching 12.3 in October, up from 11.6 in September, driven by an anticipated improvement in the business climate.

Consumer confidence fell slightly to -12.2 in October from -11.7 in September. Although households showed optimism regarding their financial outlook for the next twelve months, they were less inclined to make major purchases, reflecting a notable drop in future spending intentions. Plans to purchase or build a home, as well as to carry out home improvements, increased in the fourth quarter of 2024. This cautious optimism was likely fueled by strong income gains, yet expectations for next year remain uncertain due to anticipated shifts in fiscal policies.

Consumer loans are strong at present, helped by a drop in interest rates for new loans in recent quarters due to high liquidity surplus in the banking sector. Credit standards could be eased further in 3Q24 according to the NBRs Bank Lending Survey.