KUALA LUMPUR (Sept 12): The sales value of Malaysia's wholesale and retail trade grew 41% year-on-year (y-o-y) to RM130.7 billion in July 2022, led by a jump in motor vehicle sales value, retail and wholesale trade value, according to the Department of Statistics Malaysia (DOSM) on Monday (Sept 12).

Motor vehicles’ sales value expanded 613.8% to RM14.4 billion, retail trade surged 37.5% to RM56.6 billion, while wholesale trade rose 20.6% to RM59.7 billion, said the DOSM in a statement.

For month-on-month (m-o-m) comparison, wholesale and retail trade sales value decreased 1.6%, as motor vehicle sales value fell 10.5%.

In terms of volume index, wholesale and retail trade registered a y-o-y growth of 33.7%. The expansion, the DOSM said, was contributed by motor vehicles, which increased 681.6%, and retail trade, which rose 31.6%. Similarly, wholesale trade also recorded a positive growth at 10.8%.

However, for seasonally adjusted volume index, it went down 1.4% m-o-m, the DOSM said.

“For the performance across sub-sectors, retail trade sub-sector growth of 37.5% in July 2022 was supported by retail sales in non-specialised stores which grew 39.1% or RM5.9 billion to RM20.8 billion. Likewise, other groups in this sub-sector also recorded positive growth, namely retail sales in specialised stores (47.1%), retail sales of automotive fuels (73.7%) and retail sales of household goods (28.8%),” it said.

Meanwhile, the 613.8% jump in the motor vehicles sub-sector this month was lifted by sales of motor vehicles which soared 431.5% to RM7 billion, sales of motor vehicles parts and accessories (911.6%), maintenance and repair of motor vehicles (1,062.3%), and maintenance and repair of motorcycles (916%).

“The increase in [the] wholesale trade sub-sector with 20.6% was mainly attributed to other specialised wholesale (22%). Among the groups that contributed to this growth were wholesale of household goods (35%), wholesale of agricultural raw materials and live animals (17.8%), wholesale of machinery, equipment and supplies (20%), and wholesale of food, beverages and tobacco (7.2%),” the DOSM added.

Looking at the macro outlook and improving fundamentals, MIDF Research projects retail trade growth at 17.6% for 2022. This is driven by pent-up demand which will continue until the end of this year, underpinned by an improving labour market, stable inflationary pressure and domestic economy reopening.

“Malaysia’s consumer spending is expanding strongly as reflected in retail trade sales growth of 21.6% y-o-y in 7MCY22,” said MIDF in a note on Monday.

Although the overnight policy rate (OPR) is on an upward trajectory, MIDF believes it would have minimal effect on domestic spending. The OPR is set to reach 2.75% by the end of this year, still below 2019’s level of 3%.

However, it believes the country’s monetary policy is on a normalisation process rather than a tightening path, possibly to reach 3% by early 2023.