You are here
Oct retail sales sans cars down 4.6%; soft Nov-Dec showing likely (Amended)
IT'S turning out to be a rather cheerless year for retailers here.
And further down the road, the roar from auto sales might just end up as the only engine that will drive the retail sector, observers noted.
Figures released on Tuesday by the Department of Statistics - the last to be published this year - show that retail sales got a leg-up from motor vehicle sales in October, rising 2.7 per cent year on year.
Total retail sales value was estimated at S$3.5 billion, higher than the S$3.4 billion in October 2014.
But excluding motor vehicles, which saw a 61.8 per cent jump in October, retail sales actually fell 4.6 per cent.
"Auto sales could mask the underlying weak consumption in demand in the months ahead, which is expected to continue on a slow decline," said ANZ bank economist Ng Weiwen.
November and December figures might show an upturn as the economy heads towards the holiday season, but this will be a month-on-month pickup while year-on-year numbers will remain soft, added Mr Ng.
The fall in retail sales was broad-based in October this year. Aside from the surge in auto sales, only three other categories saw an increase in sales.
Sales of telecommunications equipment and computers saw the largest drop at 19.4 per cent year on year, while sales of medical goods and toiletries increased the most at 11.3 per cent.
Compared to the same period last year, sales of food and beverage (F&B) services fell 3.8 per cent in October.
The total sales value of F&B services in October 2015 was estimated at S$650 million, lower than the S$676 million in October 2014.
Worsening haze conditions two months ago were cited as primary reasons for the uptick in medical goods sales, and for the poor showing in other areas.
But though the haze may have cleared, there is still a pall hanging over the retail sector.
For one, retail figures from recent months were lifted by increased spending in line with Singapore's 50th year of independence celebrations, or SG50.
In August, retail sales expanded 6.5 per cent year on year. Excluding motor sales, it still increased by a modest 1.8 per cent.
Corresponding figures for September were a 4.3 per cent increase and a decrease of 1.8 per cent.
As the celebratory cheer for retailers dies down in October, macroeconomic trends paint a worrisome picture.
Figures from the Manpower Ministry, also released on Tuesday, showed that employment growth here fell sharply from a year ago in the third quarter. This means that growth in the first nine months of this year is the lowest since 2009 when the recession hit Singapore.
Slower growth in the United States could also have knock-on effects for Singapore's trade-reliant economy. The Monetary Authority of Singapore previously noted in its latest macroeconomic review that US gross domestic product growth was driven mainly by domestic consumption.
"What we're afraid of is a trade recession that we see now in Singapore morphing into a growth recession," said Mr Ng. This fear is expected to weigh on households here, as they become more cautious in their spending.
Car sales are expected to be the main support for lifting retail figures next year.
Based on figures previously released by the Land Transport Authority, and assuming that owners will scrap their ten-year-old cars, there will be at least about 88,000 car COEs available over the next year alone.
"Next year's retail sector performance might remain similar to what we've seen so far, and the increased quota for COE might end up as the sole driver that's supporting retail figures," said Jeff Ng, Asia economist at Standard Chartered.
An earlier version of this article incorrectly stated the August and September percentage figures for changes in total retail sales and also for changes in sales figures excluding auto sales. The article above has been revised to reflect this.