Retail swing surprises and grow 0.7% in November with the help of Black Friday

After collapse in October, retailers surprised positively in November, growing above market forecasts. In the restricted concept, high on the monthly comparison was 0.7%, against an average expectation of 0.3%. The result of the month was driven, in part, by Black Friday.
In extended trade, which also considers sales of vehicles and construction material, the advance was even greater, from 2.5 percent, compared with 0.6% average expectation. The data, published yesterday in the Monthly Trade Survey (PMC), the IBGE, reinforce the expectation of continued growth in the retail sector and a more consistent upturn as early as 2017.
"It seems that there is a spread of growth among the segments, which is a very positive and reinforces the expectation of continued advancement," says economist of Santander, Rodolfo Margato. Expanded retail, eight of the ten activities analysed in the survey had growth in monthly basis.
The highlights in the period were the segments of other personal and household articles and furniture and appliances, which grew 8% and 6.1%, respectively. Both have a strong presence on the internet and usually have a greater participation in the actions of the period.
As Black Friday is a relatively new event in Brazil, the effects of date may not yet have been completely incorporated into the seasonal adjustment of PMC explains Margato, which makes forecasts for November and months (October to December), and helps explain the surprise from banks and consultancies with the result.
In comparison with November 2016, the retail sector sales grew 5.9%, reaching a 1.1 percent expansion in the last twelve months and 1.9% in the first eleven months of 2017. According to the IBGE, the rise in year-to-year basis was the largest for a month of November since 2013 (7.1%), which shows that the growth was not influenced only by Black Friday, but by a much more favorable economic scenario to seen in 2016. The Economist of 4E consulting, Alejandro Padrón, has similar evaluation and highlights factors such as improved income, credit conditions and a greater propensity for consumption. "The Board at the end of 2017 was much better than seen in 2016," he said.
Perspectives
The positive outcome of November should be repeated in December, PMC in the opinion of economists, leading to an even better performance at the end of the year. Some preliminary data from entities and companies support the thesis, since point to considerable growth in Christmas sales. An indicator of Serasa Experian, for example, shows 5.6% expansion in sales for the period, in comparison with the same range of 2016, while tenants of shopping data signal an advance of 6%.
For Margato, Santander, the trend is that there is a strong growth in year-to-year basis, but more moderate on a monthly comparison. "On the shore waited a result more moderated in December, with high below 0.5%. But in the annual comparison should still have a robust growth, at 5%, "he says.
The Economist of 4E also expects a more modest result in margin for December. According to him, Black Friday may have led consumers to anticipate some of your holiday shopping, which tends to impact the result in monthly comparison.
For the year, Santander foresees an expansion of 2.4% for retail and restricted to 4% for the enlarged. The data, according to the Economist, were revised upward for two months. The projection of the 4E Consulting is similar, with a high of 2% and 3.5%, respectively. For 2018, the prospect is that the trajectory of growth to continue. "Consumption will continue as the main engine of economic recovery," said economist of Santander, which has projected a growth of 4% in the restricted concept and 7% in extended to this year.
Best of the year
By November, the thread that performed the best performance, in cumulative 2017, was that of furniture and appliances, with almost 10% expansion in the volume of sales. According to Padrón, the 4E consulting, the industry tends to encourage more of the upturn, for being a cyclic segment. "As the economy gets better those threads more cyclical and more sensitive to macroeconomic factors tend to disappoint quite a lot," he says.
Another segment that showed a significant expansion this year was the building material, with high of 9.2% accumulated. The two branches of the resumption of loans and favours a low base.