Not a happy Chinese New Year for Singapore retailers in February

Singapore

CHINESE New Year was not enough to lift retail sales in February this year, prompting some economists to declare that consumption in Singapore is already at such low levels that economic growth will be threatened.

Despite a year-on-year 51.3 per cent surge in motor sales, February retail sales saw a 3.2 per cent fall from the same month last year, figures released by the Department of Statistics (DOS) showed on Friday. Excluding motor sales, it dipped 9.6 per cent y-o-y.

When compared to January, however, total sales improved 1.7 per cent. Stripping away motor sales, which saw a 15 per cent increase month-on-month, February sales fell 1.1 per cent from January.

These numbers were released a day after the government unveiled advance estimates of gross domestic product (GDP) growth for the quarter ended March 31.

They showed the services sector growing 1.9 per cent y-o-y, but shrinking 3.9 per cent from the preceding quarter.

"Considering that the GDP figures would have factored in retail performance, what's left is to see how much consumers spent in March," said OCBC economist Selena Ling, in an interview with The Business Times.

"But it seems that with the February retail figures, the consumption side of the story in economic growth seems to be down in the dumps," she added.

February's retail data undershot economists' predictions by a large margin. The median estimate among 12 of them polled by Bloomberg had expected y-o-y growth to be 3.4 per cent.

Instead, Friday's data painted a picture of a quiet retail scene.

Aside from motor sales, only medical goods and toiletries, and mini-marts and convenience stores, saw increases in year-on-year sales, but growth was small. The former picked up 4.1 per cent and the latter, 0.8 per cent.

Six other categories saw double-digit declines y-o-y, with sales of food and beverage items seeing the steepest decline at 34.7 per cent. Sales of telecommunications apparatus and computers chalked up the second largest decline at 16.6 per cent.

When compared to January, six categories saw better performance. However, aside from motor sales which saw the biggest rise, the other five saw increases of only 0.9-5.2 per cent.

Optical goods and books fell 8.7 per cent fall from January, the largest decline.

Sales of food and beverage services declined 1.9 per cent y-o-y, but rose 0.3 per cent from the previous month.

The weak February figures can be attributed to Chinese New Year taking place early in the month, suggested CIMB economist Song Seng Wun.

Highlighting that the festival happened later in February last year, when it saw a year-on-year 15.8 per cent spike in retail sales, it showed how much consumers were spending to prepare for the festival.

"As such, most of the pre-Chinese New Year spending went into January this year," said Mr Song.

Making the retail scene even quieter was possibly the fact that consumers might have left the country during the holiday - evidenced by the fact that sale of discretionary goods and services dipped across the board, said OCBC's Ms Ling.

With February's retail numbers falling in line with advance GDP estimates, economists are not keeping their hopes high for a pickup in consumer spending in the later months of the year to boost the economy.

Mr Song singled out lower demand for electronic gadgets, and services for dining at restaurants, which saw a 6.8 per cent year-on-year fall for its services, saying that economic sentiment is weak now. "It's very cautious spending now," he said. "And with the International Monetary Fund lowering its global growth forecast again, going forward we might see more of the same from consumers."