Economists expect tourism to support retail sales, after on-year growth eases to 1.8% in May
Elysia Tan
SINGAPORE’S retail sales grew 1.8 per cent year on year (yoy) in May, narrowing from the 3.7 per cent growth recorded in April, the Department of Statistics (SingStat) data showed on Wednesday (Jul 5).
On a month-on-month, seasonally adjusted basis, retail sales were down 0.2 per cent, reversing from the 0.5 per cent growth charted in April.
DBS economist Chua Han Teng noted: “Retail sales growth has already peaked, and May’s yoy moderation reflected less supportive base effects.”
OCBC chief economist Selena Ling said: “Although there are more international visitors coming to Singapore in Q2 (with more than a million clocked for three straight months), the converse could also be true with more Singaporeans travelling overseas.”
May’s reading was slightly below the Bloomberg median estimate of 1.9 per cent growth on year. But economists generally remained positive on retail sales growth, mainly due to continued tourism recovery.
May’s estimated total retail sales value was S$4 billion, with online sales accounting for 11.8 per cent. The month’s sales value was higher than April’s S$3.9 billion, noted UOB senior economist Alvin Liew. In the preceding month, online sales accounted for 11.9 per cent of total retail sales.
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Excluding motor vehicles, retail sales still expanded by 1.8 per cent from the year-ago period, but fell further sequentially – down 0.4 per cent.
May’s figures marked four consecutive months of year-on-year retail sales growth, and 15 successive months if motor vehicles are excluded, Chua said.
A strong return from China is still uncertain, some economists said.
“We have been sceptical about the market’s expectations for a China-reopening-led, V-shaped recovery in 2023,” said RHB senior economist Barnabas Gan. Liew also said that the slower-than-expected return of Chinese tourists remains concerning.
Still, further tourism recovery should lift retail sales, economists agreed.
Liew and Ling flagged the pull of events such as Formula 1 and concerts, and Liew noted the contribution of BTMICE (business travel and meetings, incentive travel, conventions and exhibitions) activities.
If realised, a “significant influx of Chinese tourists and their related spending in the subsequent months” could also provide uplift to retail sales in the second half of 2023 or early 2024, said Liew.
On top of tourism, Gan believes that low-base effects may benefit Q3 2023’s retail sales growth, as pent-up demand began to taper off in H2 2022, ahead of some pickup in Q4 2022 ahead of the 1 percentage point goods and services tax hike in January 2023.
Additionally, Liew expects strong employment and wage growth in the Republic to contribute further to domestic consumption demand – but he and Chua noted the potential pressures from the global economic uncertainty.
A more cautionary external environment and still-elevated inflation pressures may increasingly curb households’ discretionary spending, Liew said.
Ling added that “the domestic labour market may be starting to cool slightly”.
Yoy, a majority of retail sales categories posted growth, with exceptions in five of the 14 sectors – namely department stores, supermarkets and hypermarkets, petrol service stations, furniture and household equipment as well as recreational goods.
The food and alcohol as well as cosmetics, toiletries and medical goods segments led the growth in sales, mainly on higher demand for alcoholic products and cosmetics and toiletries, including those sold in duty-free shops, SingStat said.
On a month-on-month seasonally adjusted basis, sales in a majority of retail categories grew.
Sales of food and beverage (F&B) services climbed by 8.5 per cent on the year, less than the 15.3 per cent increase in the preceding month. It was up by 0.4 per cent on a monthly seasonally adjusted basis, SingStat data showed.
On the year, growth was recorded across all segments:
- Restaurants (0.2 per cent)
- Fast-food outlets (8.3 per cent)
- Food caterers (56.3 per cent)
- Cafes, food courts and other eating places (10 per cent)
On a seasonally adjusted monthly basis, all categories were up, except for restaurants, which slid 3.5 per cent.
F&B services receipts amounted to S$994 million, with online F&B sales accounting for an estimated 24.6 per cent. (see *Amendment note)
*Amendment note: A previous version of the story incorrectly stated that the total sales value of F&B services in May was estimated at S$944 million. It was in fact S$994 million.
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