Itaú BBA - CHILE - Robust retail activity; wholesale slowdown in January

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CHILE - Robust retail activity; wholesale slowdown in January

March 3, 2017

We expect the GDP proxy for January to grow 1.0%, down from the 1.2% in December.

New sectoral indices released by the national statistics institute (INE) show retail activity remained robust at the beginning of the year. Retail and vehicle sales continues to expand, partly explained by the boost in consumption tourism. In addition to these historically reported series, the revamped commercial activity indicators now include wholesale activity. The new commercial activity index, aggregating the three components, showed moderation dragged down by wholesale activity. In conjunction with the disappointing industrial production indicators released earlier this week, we expect the GDP proxy for January to grow 1.0%, down from the 1.2% in December. We note the new sectoral data released this week are consistent with the upcoming national accounts data to be published on March 20.

Private consumption related activity was lifted by car sales. Retail and vehicle sales – composition comparable to the old series – grew 3.8% (2.7% in December), in line with the Bloomberg market consensus and below our 4.5% forecast. The month was once again characterized by strong vehicle sales (21.8% year over year increase), helping lift durable goods sales growth to 17.4%. The 3.0% annual gainin retail sales (2.6% previously) was driven by the 11.3% rise in clothing, footwear and specialized leather products (explaining around one third of the 1.3 percentage point contribution to total commercial sales). When compared to the previous retail sales index, the new series hints at a downwards revision in retail activity in the latter part of last year. Meanwhile, supermarket sales increased 1.8% year over year, down from 3.4% at the close of 2016.

Total commercial sales came in at 1.9% year over year, down from 3.7% in the previous month. Wholesales were the main drag, dropping 1.6% in 12-months (+4.8% in December). The annual drop was primarily due to the 10.7% decline in machinery, equipment and material sales (+2.5% previously). In the quarter ending in January, the commercial activity index still grew a firm 3.1% (3.0% in 4Q16 and 1.9% in 3Q16), lifted by the 6.6% rise in car and parts sales (-11.2% in 3Q16). Retail sales grew 2.3% (2.9% in 3Q16), while wholesales were up 3.0% (5.2% in 3Q16).

With inflation expected to stay low and the interest rate likely to decline further, private consumption activity could see some benefit. However, the loosening labor market will partly counter this. Overall, we expect an activity recovery to 2.0% this year, from the anticipated 1.5% for 2016, however, risks remain tilted to the downside.


Miguel Ricaurte

Vittorio Peretti


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