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Cars, tech sell well but Jan retail sales down 5%

Economists cite lower tourist arrivals, sluggish property market and weak currency and say the trend may continue
Saturday, March 14, 2015 - 05:50
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TOP DRIVER: Sales climbed 4.8 per cent month-on-month in January on the back of brisk sales of motor vehicles, which increased 22.8 per cent.

Singapore

MOTOR vehicle and technology retailers may have seen buoyant sales in January, but total retail sales continued its year-on-year decline by dipping 5 per cent to S$3.7 billion, compared to the S$3.9 billion posted in January 2014.

The sales of motor vehicles, and telecommunications apparatus and computers, were the only two sectors with significant increases at 33.2 per cent and 25.9 per cent from January 2014's figures respectively.

Excluding motor vehicles, retail sales decreased 8.7 per cent.

Sales in most other categories, such as department stores, supermarkets, apparel and footwear and recreational goods, all fell by between 7 per cent and 42.1 per cent year-on-year.

Retail sales of food and beverages fell the most drastically, mainly due to higher sales recorded a year ago when Chinese New Year fell in January 2014.

Retail sales of petrol service stations posted the second highest decrease of 27.5 per cent year-on-year, partly due to lower petrol prices. Removing the price effect, sales of petrol service stations decreased by 11.3 per cent.

Retail sales continue to be weighed down by a drop in tourist arrivals, which have failed to recover meaningfully over the past year, observed Barclays economists Wai Ho Leong and Bill Diviney.

They also cited the property market correction, "which has sapped confidence and led to lower sales of furniture and household goods due to lower property transaction volumes".

This is compounded by the pick-up in market interest rates and a weakened currency, and such headwinds are likely to continue to put a drag on retail sales in the coming months.

However, a silver lining may lie in the drop in global oil prices, say economists, which can help lift real incomes and support consumer confidence.

On a month-to-month basis, overall retail sales climbed 4.8 per cent in January 2015 after seasonal adjustment, on the back of brisk sales of motor vehicles, which increased 22.8 per cent month-on-month.

The watches and jewellery retail segment also posted strong sales amounting to a 11.3 per cent increase compared to December 2014.

The boost follows the removal of the Swiss franc's peg to the euro, which saw the Swiss franc soar in value, explained the Singapore Retailers Association's executive director Anthony Gan. The net effect was that luxury Swiss watches were suddenly cheaper in Singapore, and this helped drive sales.

Sales in categories such as food and beverages, mini-marts and convenience stores, supermarkets, department stores, furniture, household equipment, apparel and footwear and optical goods and books also saw slight climbs between 1.4 per cent and 6.7 per cent over the same period.

Mr Gan added that he expects the Chinese New Year sales boost to be felt in the figures for February this year.

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