Despite boost from year-ago low base, retail rebound is still on shaky ground: Analysts
SINGAPORE retail sales are still below pre-pandemic levels, despite the low base effect from the year-ago circuit breaker, Department of Statistics (SingStat) data on Friday showed.
Economists are fretting over the retail recovery, especially with the stumbling block of tightened Covid-19 restrictions in May and June this year.
Retail sales rebounded 54 per cent year on year in April, to S$3.3 billion, for the third straight month of growth. Food and beverage (F&B) receipts jumped by 73.4 per cent to S$693 million, on the same low base.
But till takings "continued to be below pre-Covid levels", SingStat noted in its report. On a seasonally adjusted, monthly basis, both retail and F&B sales shrank by 1.3 per cent.
Said UOB economist Barnabas Gan in a note: "The shortfall seen in April 2021 is likely due to the continued absence of tourism-led demand due to the ongoing border controls.
"Moreover, Singapore's resident jobless rate remains elevated ... suggesting that domestic demand may have also been lower."
This comes as April's performance fell short of the median 58.6 per cent expansion predicted by private-sector economists in a Bloomberg poll.
To be sure, SingStat reported that most retail segments posted "significant year-on-year increases" against the low base in April.
Key exceptions were mini-marts and convenience stores, and supermarkets and hypermarkets, where sales declined after a spike in grocery purchases during the "circuit breaker" period last year.
F&B sales were up at fast-food outlets, restaurants, and cafes, food courts and other eateries. But catering receipts fell, on lower demand for meals at foreign worker dormitories that had been in lockdown last year.
OCBC economist Howie Lee pointed to the patchy retail pick-up as proof that recovery "has hit a brick wall in the past quarter", with uneven improvement across segments.
The nation's retreat into Phase 2 (Heightened Alert), which lasts until June 13, is a concern for watchers.
Chua Hak Bin, senior economist at Maybank Kim Eng, told The Business Times that retail sales should fall month on month in May "but continue to show a healthy high double-digit growth from a year ago".
While shopping mall footfall has suffered from a dining ban that lasts until mid-June, "businesses and consumers are also more comfortable and ready to shop via digital platforms, which will cushion the dip in bricks-and-mortar sales", he said.
Similarly, payment services company Hoolah's chief executive Stuart Thornton expects "a positive impact from the festive period" on retail sales for May, thanks to holidays such as Mothers' Day and Hari Raya Puasa.
"We anticipate that as F&B establishments reopen post-Phase 2 (HA), we will see a further return to normalcy, especially in the physical retail environment," he added.
Mr Lee has tipped full-year retail sales growth of 10.5 per cent, down from his earlier forecast of 12.5 per cent, while Mr Gan upgraded his outlook to 10 per cent, from 1 per cent.
Granted, the rocky road for retail may not be a spanner in the works for the overall economic recovery.
Even assuming retail and hospitality see absolutely no activity during the heightened alert, the economy would lose just 0.7 percentage point for the quarter, Khoon Goh, head of Asia research at ANZ, has estimated.
"Other sectors of the economy are operating as closely to normal as possible, which will minimise the negative impact during the quarter," added Mr Goh, who expects the tough measures to be wound down on schedule.
But Mr Lee said that even if Singapore returns to the third phase of its three-stage economic reopening as planned, "the continued restrictions on movement as well as lack of tourist arrivals mean retail sales for the rest of 2021 will likely be sluggish".
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