Singapore retail sales rise 6.6% in September, reversing dip in August

SINGAPORE'S retail sales rose 6.6 per cent year on year in September 2021, reversing the fall in August, following a strong showing from the computer and telecommunications industry, going by data from the Department of Statistics Singapore (SingStat) on Friday (Nov 5).

The computer and telecommunications industry recorded higher sales of mobile phones due to new product launches. The industry grew 66.1 per cent year on year and 23.8 per cent month on month. Online sales accounted for 53.7 per cent of the industry's total sales.

Excluding motor vehicles, retail sales were up 8.3 per cent, compared to the flat growth in August 2021. Total retail sales in August had fallen 2.8 per cent.

On a seasonally adjusted month-on-month basis, total retail sales rose 6 per cent in September over the previous month, while the increase was 5.1 per cent excluding motor vehicles.

On the whole, retail sales value remained below pre-Covid-19 levels at S$3.4 billion in September. Online retail sales comprised about 15.2 per cent of this amount, growing from August's 14.1 per cent.

Sales in a majority of industries grew year on year. After computer and telecommunications equipment, the next biggest winner was petrol service stations, with a 22.3 per cent year-on-year rise.

Sequentially, watches and jewellery grew 13.3 per cent year on year and 5.5 per cent month on month.

Sales of cosmetics, toiletries and medical goods recorded the second biggest month-on-month growth of 13.5 per cent, while the year-on-year increase was 7.1 per cent. (see amendment note)

Optical goods and books were the biggest loser with a 10.4 per cent year-on-year decline, although the sector registered a 4.1 per cent increase from August 2021.

Minimarts and convenience stores were the next biggest loser with a 6 per cent fall year on year, and 0.1 per cent month-on-month decline.

Separately, sales of food and beverage (F&B) services rose 4.4 per cent in September on a year-on-year basis, compared to the 6.7 per cent decline in August.

Total F&B sales in the month was S$669 million, with onlines sales accounting for 34.5 per cent of it.

On a seasonally adjusted basis, sales of food and beverage services grew 12.1 per cent in September 2021 over the previous month.

The growth is mainly due to the lower base in August 2021, when stricter dine-in restrictions were in force, SingStat said.

As last year's low-base effect fades, sales of food caterers grew 36.4 per cent in September on a year-on-year basis, and rose 1.9 per cent month on month.

Similarly, turnover of fast food outlets increased 10.7 per cent year on year, and was up 3.4 per cent month on month.

Cafes, food courts and other eating places increased 8.4 per cent year on year and 5.7 per cent month on month, due to higher demand for food deliveries.

However, restaurant sales fell 5.2 per cent, due to tightened dine-in restrictions in September, compared to the corresponding period a year ago.

On a seasonally adjusted month-on-month basis, sales at restaurants climbed 27.7 per cent, largely due to the mostly lower base in August 2021.

(see amendment note)

The retail sales rise in September exceeded OCBC's forecast of 2 per cent year on year and 1.9 per cent month on month, as well as Bloomberg's consensus forecast of 2 per cent year on year and 0.9 per cent month on month, pointed out chief economist and head of treasury research and strategy at OCBC, Selena Ling.

She highlighted that the full impact of the tightened restrictions may not have been fully captured in the September retail sales data as the Covid-19 stabilisation phase started only on Sep 27 and has been extended to last till Nov 21.

The potential dent that the restrictions will cause on domestic private consumption "may be relatively mild" as the local labour market conditions have improved, she noted.

Ling said: "This suggests some confidence in the high domestic vaccination rates amid the ongoing shift to an endemic Covid environment. Moreover, there have been recent signs that the Delta resurgence is subsiding in many regional economies and more neighbouring countries are opening up for overseas travel, which may bode well for Singapore as an air transport hub."

The gradual reopening of borders through the vaccinated travel lanes and the upcoming year-end festive season, give retail a more "upbeat" 6-month outlook, she added.

OCBC forecast retail sales growth to reach 9.5 per cent in 2021, before moderating to 3.5 per cent in 2022.

CIMB economist Song Seng Wun said the market is stabilising with labour market conditions improving, and that more spending can be expected at the end of the year, as bonus cheques come in.

"Hopefully, there is more opening up of the economy in the next few months. It all depends on the easing of the burden on the healthcare system. But consumer spending should remain stable. Of course, there is a long way to go before we reach pre-Covid levels," he said.

He added that although sales may pick up in the near-term, consumers still need to be wary of logistical bottlenecks, as goods may take a longer time to be delivered as a result of the pandemic.

"F&B may still see restrictions over the next few months. But if we look at sales dollar value, September has been the highest since April this year. This is a sign of optimism," he said.

Amendment note: The article previously said that the month-on-month growth for cosmetics, toiletries and medical goods was the biggest, when in fact it was the second biggest.

Amendment note: The chart for retail sales index previously showed the index data for total retail sales excluding motor vehicles, when it should have shown the total retail sales including motor vehicles. The article has been amended accordingly.