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May retail sales speed ahead on roaring car sales

46% jump lifts retail numbers by 6.1%; but analysts do not expect May performance to be repeated

May motor vehicle sales received a boost from an increase in Certificate of Entitlement (COE) supply. Economists expect June figures to be dampened by muted GSS spending so far.


A WHOPPING 46.6 per cent jump in motor vehicle sales boosted Singapore's retail sales in May, which rose 6.1 per cent year-on-year, said the Department of Statistics on Wednesday.

Excluding the exuberant car sales, retail sales went up by a far more modest 0.9 per cent.

Total retail sales value in May was estimated at S$3.5 billion, higher than the S$3.3 billion in May 2014.

Independent economist Song Seng Wun told The Business Times: "Cars were really what gave the headline number a lift, because of the increase in Certificate of Entitlement (COE) supply. But we shouldn't be so impressed with the overall number because obviously, it's not an indication of underlying consumption."

Still, May's figures surpassed market expectations by a fair bit. The median estimate of nine forecasts submitted to Bloomberg was for a 3 per cent year-on-year increase in retail sales. Excluding motor vehicles, the market had projected a marginal 0.2 per cent decline. Not only did May's 0.9 per cent rise defy such expectations, it also marked the first positive year-on-year print since February's Chinese New Year-related rebound.

May's improvement in retail sales coincided with a further recovery in tourism; the Singapore Tourism Board said on July 12 that international visitor arrivals were up 1.1 per cent year-on-year in May.

Noted Barclays economist Leong Wai Ho: "Indeed, the improvement was driven by tourist-reliant department store sales (4.9 per cent) and watches & jewellery (1.3 per cent), which offset segments linked to the weak property market, such as furniture & household equipment (-1.5 per cent)."

The high double-digit surge in motor vehicle sales also countered poorer performances in areas such as petrol service stations (-16.2 per cent), recreational goods (-11.9 per cent) and optical goods & books (-8.3 per cent).

In contrast, retail sales of medical goods & toiletries rose 10.3 per cent, supermarkets by 3.6 per cent and mini-marts and convenience stores by 1.4 per cent.

On a seasonally-adjusted basis, retail sales rose 2.4 per cent in May over the previous month; excluding motor vehicles, retail sales went up 1.8 per cent month on month.

Going forward, economists do not expect car sales to continue to haul up overall retail sales, as favourable base effects are set to wear off.

UOB economist Francis Tan said: "Motor vehicle sales contracted in the first half of the year until May, but there won't be so much support in the months ahead.

"In fact, it's a high base from July onwards ... So even with a higher COE supply, I don't think we'll see such super strong numbers (from car sales in the future)."

OCBC economist Selena Ling added: "Looking ahead, the June retail sales may not be able to sustain this outperformance. MasterCard revealed that local cardholders spent 12.7 per cent less during the first month of the Great Singapore Sale, which started between May 29 and June 28 this year, whereas tourists' spend rose 9.9 per cent year-on-year but amounted to only about half of local card spend."