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Singapore retail sales down for 9th month in October with steeper 4.3% decline

Retail sales fell for the ninth straight month in October, coming in below market expectations, even as, in a blow to demand outlook, separate government data showed signs of a weaker labour market.

RETAIL sales fell for the ninth straight month in October, coming in below market expectations, even as, in a blow to demand outlook, separate government data showed signs of a weaker labour market.

Stores in Singapore rang up S$3.6 billion in sales, down by 4.3 per cent year on year, the Department of Statistics said in a statement on Thursday. About 6.1 per cent of these transactions were over the Web.

The fall, wider than September’s revised 2.1 per cent decline, was also steeper than the consensus estimate of 1.5 per cent in a Bloomberg poll. On a seasonally adjusted, monthly basis, sales slipped by 2.2 per cent.

Even when big-ticket motor vehicle purchases were excluded, retail sales were down by 0.6 per cent year on year, or 1.5 per cent on the month before.

“October’s retail sales paint a pretty mixed picture, in my view,” Maybank Kim Eng economist Lee Ju Ye told The Business Times, noting that the decline was mainly in discretionary items, as consumers may have held back ahead of year-end promotions in November and December.

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Vehicle sales, which were lower by 22.7 per cent on the year before, had dragged down the headline figure, but almost all categories showed sales weakness. Furniture and household goods were down by 10.6 per cent, followed by optical goods and books, which lost 6.9 per cent.

Just four segments notched year-on-year growth: watches and jewellery, with a 7.2 per cent rise in sales; clothes and shoes, up by 4.7 per cent; supermarkets and hypermarkets, up by 1.3 per cent; and mini-marts and convenience stores, at 1 per cent.

“Staples are generally resilient, as indicated by the uptick in supermarkets and softer decline in food and beverages,” Ms Lee told BT, while United Overseas Bank economist Barnabas Gan wrote in a report that growth in segments such as clothes, supermarkets and provision shops imply that “rising demand for consumer staples (has) been a viable cushion to the overall fall in retail sales”.

The drop in spending came even as resident unemployment crept up from 3.1 per cent in June to 3.2 per cent in September, according to Ministry of Manpower figures also out on Thursday.

Private-sector economists polled by the Monetary Authority of Singapore foresee private consumption growth easing from an estimated 4.1 per cent in 2019, to just 2.7 per cent in 2020.

But RHB Securities analyst Juliana Cai, who covers the consumer sector, had said in a report on Wednesday that spending in Singapore is expected to “stay resilient” on factors such as an expansionary Budget in an anticipated election year, as well as steadily low unemployment.

Ms Lee agreed that a generous Budget “could help support retail sales in 2020”, but warned that labour-intensive industries like retail and food and beverage services could take a hit when foreign worker quotas are tightened next year.

In the wake of the latest jobs numbers, Citi economists Kit Wei Zheng and Ang Kai Wei wrote on Thursday that the labour market looks softer, despite stronger wage growth in the third quarter.

“While we do not expect a material rise in retrenchments, this will likely imply resilient, rather than recovering consumer spending into H1 2020,” they said in a flash note.

Meanwhile, food and beverage service takings grew by 4.5 per cent year on year in October, to S$893 million, with caterers the only category to post shrinking receipts.

Catering sales were down by 1.5 per cent year on year, while fast food outlets grew by 7.9 per cent, restaurants by 6.1 per cent, and other eateries by 3.3 per cent.

Still, food service tickets were down by 1.3 per cent on a monthly basis, as cafes, food courts and other eateries made up the only segment in the black compared with September.

Amid hopes of a modest pick-up in the economy, Mr Gan believes that “the improvement in risk appetite and a rosier economic environment should provide the necessary fillip for consumer confidence” in 2020, as weak retail sales make for a low base for growth in the new year.

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