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Motor sales power May's retail sales growth to 3%
SINGAPORE retail sales for the month of May rose 3 per cent from a year ago, said the Department of Statistics (DOS) on Friday.
The total retail sales value in May 2016 was estimated at S$3.7 billion, higher than the S$3.6 billion in the year before.
However, if motor vehicles - which recorded another double-digit increase in sales (35.9 per cent) - are stripped out, retail sales slumped by 3.3 per cent.
Economists are not particularly shocked by the negative figure, given that consumers have tightened their purse strings amid an uncertain economic outlook.
UOB economist Francis Tan said: "Overall, we are not surprised by the negative retail sales figure because consumers are still quite wary of the economic climate; sentiments are not strong among local consumers."
He said motor vehicles were continuing to be a "jarring force", driving retail sales up, with COE prices remaining low, relative to previous years.
Local consumer spending aside, economists note that tourists visiting the Republic also appear to be on a budget.
Statistics released by the Singapore Tourism Board indicated that the number of visitor arrivals actually rose by 9.8 per cent year on year in May.
Despite this, the amount they spend while here seems to still be falling. Mr Tan attributed this to weak economic growth in the region, and to the fact that the Singapore dollar has risen against regional currencies.
"This is especially reflective in discretionary goods like watches and jewellery, and telecommunications apparatus and computers," he said.
He said he expects the decline in discretionary goods to be persistent in the following months, on the back of the depreciation of the renminbi and the United Kingdom's vote in the last week of June to leave the European Union.
CIMB private banking economist, Song Seng Wun said: "The fall in discretionary spending underlines the state of the economy, as consumers are now selective on what they purchase."
He suggested that online shopping was also making a dent in the fortunes of brick-and-mortar businesses.
In May, aside from motor vehicles, rises were also recorded in medical goods & toiletries (1.9 per cent) and furniture & household equipment (3.1 per cent).
The largest falls were in telecommunications apparatus & computers (-17.3 per cent) and petrol service stations (-14.9 per cent).
Supermarkets slid 3 per cent; mini-marts & convenience stores dipped 2.3 per cent, and department stores, by 1.9 per cent.
Retail sales of all other segments like recreational goods, optical goods & books, watches & jewellery, food & beverages, wearing apparel & footwear went down by between 2.2 per cent and 8.7 per cent.
UOB's Mr Tan commented that consumer staples are more resilient, and that the slump in supermarkets, and mini-marts & convenience stores could be a one-off occurrence.
CIMB's Mr Song added that telecommunication apparatus and computers have recorded six months of double-digit declines.
"There are no new gadgets to get any one excited.
"But to be fair, it is reflective of the global picture, people are becoming more selective and there is nothing new to excite them," he said.
He said he expects this negative trend to persist this year, with motor vehicles driving up retail sales.
Consumers will be more cautious with the way they spend, especially with the underlying macroeconomic conditions, under which growth is more subdued, and hiring is slowing down.
DOS said that on a seasonally adjusted basis, retail sales increased 1.4 per cent in May over the previous month. Excluding motor vehicles, retail sales rose 2.3 per cent.