Singapore retail sales up 79.7% in May from low base of 2020's 'circuit breaker'

SINGAPORE'S retail sales rose 79.7 per cent year on year in May to S$3.3 billion, rebounding from the low base during the 2020 "circuit breaker", according to a Singapore Department of Statistics release on Monday.

This was up from April's 54 per cent jump, and exceeded economists' expectations of a 65 per cent rise. Yet retail sales remain below pre-Covid levels, noted Singstat. May's figures were also down 6.8 per cent on a month-on-month seasonally adjusted basis.

Online sales accounted for 13.7 per cent of May's takings, up from 11.2 per cent in April. Excluding motor vehicles, May's retail sales were up 61.6 per cent year on year, but down 5.2 per cent on a month-on-month seasonally adjusted basis.

Due to "the low base in May 2020 when most physical stores were closed for the whole month", all retail industries saw major year-on-year increases, except for two categories: supermarkets and hypermarkets, and mini-marts and convenience stores. These saw falls of 12.1 per cent and 9.2 per cent respectively.

The largest increases were seen for watches and jewellery, with May's takings more than 20 times the year-ago figure; department stores; and wearing apparel and footwear.

On a seasonally adjusted month-on-month basis, however, most retail industries saw declines with the implementation of Phase 2 (Heightened Alert) measures from May 16.

OCBC head of treasury research and strategy Selena Ling noted that compared to the "circuit breaker", this year's Phase 2 (Heightened Alert) period saw no closure of retail stores, more relaxed restrictions, and "generally more stable" domestic demand given local labour market stabilisation.

Yet monthly double-digit contractions in areas of discretionary spending such as department stores suggest that there was still a dampening effect on private consumption, she added: "Perhaps the on-month changes would give a clearer picture of the economic health of the retail sector."

Total food and beverage sales rose 46.4 per cent year on year to S$617 million, slowing from April's 73.8 per cent increase.

The strong annual growth was similarly due to the low base a year ago, when dining-in at food and beverage (F&B) establishments was not allowed for the whole month.

Restaurants' takings were up 89.5 per cent, followed by cafes, food courts and other eating places at 54.4 per cent, and fast food outlets at 37.2 per cent.

But food caterers' sales were down 52.3 per cent, as May 2020 had seen higher demand for catered meals from foreign worker dormitories.

In May 2021, dining-in was allowed until Phase 2 (Heightened Alert) measures kicked in - resulting in a 14.1 per cent decline on a month-on-month seasonally adjusted basis.

Online sales accounted for 38.8 per cent of F&B services takings in May, up from 24.6 per cent in April as more people ordered food online during Phase 2 (Heightened Alert).

For the rest of the year, the low base effects will start to wear off after June, said Ms Ling. But with the move to Phase 3 (Heightened Alert) in mid-June, the pickup in vaccination, and potential border reopening with travel corridors, "there may be more respite for the retail sector", she said.

OCBC's full-year forecast for retail sales growth is 11 per cent, compared to a 15.2 per cent contraction in 2020. "There is a chance that retail sales may return to pre-Covid levels by end of the year or early 2022, but (this) really depends on how motor vehicle sales also fare in addition to the above mentioned factors," she added.

UOB economist Barnabas Gan expects retail sales growth to keep expanding for the rest of the year, with the recent decline in locally transmitted Covid-19 cases and gradual improvement in the labour market. UOB's estimate for full-year retail sales growth is 10 per cent.