SINGAPORE'S retail sales grew 13.7 per cent year on year in July, extending the 14.9 per cent increase seen in the month before.
On a month-on-month seasonally adjusted basis, retail sales were also up by 0.6 per cent, reversing a 1.4 per cent decline in June, according to the Department of Statistics (Singstat) on Monday (Sep 5).
The relaxation of Covid-19 and border restrictions and a low year-ago base contributed to the gains in July, analysts said.
They were mixed on the month's readings, with some finding that July's softer headline retail number was in line with expectations, while others found it fell slightly short of forecasts.
Maybank economist Lee Ju Ye noted that consumer confidence may be seeing some dampening from surging inflation and slowing growth.
Song Seng Wun, an economist at CIMB, suggested that "the initial euphoria from the easing of restrictions" might have waned, as "revenge in-person spending" might be over for most people.
"Although we did see a big jump in visitor arrivals in July 2022… I underestimated the number of residents who travelled out of Singapore during this July," he said, adding that tourists, most of whom came from Asean, may have come to Singapore to visit friends and relatives or on organised tours, rather than to shop.
OCBC chief economist Selena Ling said: "However, it still marked the fourth straight month of double-digit year-on-year growth or fifth consecutive month of double-digit growth if motor vehicles are excluded."
Excluding motor vehicles, retail sales expanded by 18.1 per cent year on year, and 0.5 per cent from the previous month on a seasonally adjusted basis.
On the whole, the estimated retail sales value in July was S$3.9 billion, of which 12.7 per cent came from online retail sales, similar to the proportion recorded in June.
RHB senior economist Barnabas Gan added: "While retail sales momentum decelerated in the recent month, online sales continued to flourish, thus suggesting that consumer demand has shifted away from the brick-and-mortar to e-commerce platforms."
Suan Teck Kin, head of global economics and markets research at UOB, noted that the latest monthly retail sales value recorded, as well as those from May and June, have "already exceeded the average pre-pandemic figure" of S$3.7 billion in 2019, "which is a sign of the sector's recovery momentum".
Sales rose year on year across almost all categories. The exceptions were motor vehicles, supermarkets and hypermarkets, and mini-marts and convenience stores industries.
The decline in sales of motor vehicles corresponded to the lower Certificate of Entitlement quota this year, Singstat said.
Supermarkets and hypermarkets, as well as mini-marts and convenience stores, saw a fall in sales compared to a year ago because more people had stayed home during the Heightened Alert period in July 2021, leading to a higher demand for groceries.
The wearing apparel and footwear industry recorded the highest year-on-year increase in sales at 68.3 per cent, partly attributed to higher demand for bags and footwear, which Maybank's Lee said comes as more people return to office.
On a seasonally adjusted, month-on-month basis, a majority of retail categories recorded sales growth. Sales declined for 4 categories: department stores, recreational goods, optical goods and books, and petrol service stations. For wearing apparel and footwear, as well as mini-marts and convenience stores, sales were flat on the month.
Meanwhile, food and beverage (F&B) services saw sales swell by 41.9 per cent from the previous year, extending the 59.1 per cent growth registered in June. Total F&B services receipts were S$939 million, with online F&B sales accounting for an estimated 26.2 per cent, compared to 25.5 per cent in June.
Said SingStat: "The significant growth in F&B sales in July 2022 was mainly attributed to the low base in July 2021, when restrictions on dining-in at F&B establishments were in place, as part of the Heightened Alert measures."
All F&B services industries saw year-on-year sales growth:
- Restaurants (76.8 per cent)
- Fast food outlets (11.5 per cent)
- Food caterers (133 per cent)
- Cafes, food courts and other eating places (22.1 per cent)
On a seasonally adjusted, monthly basis F&B receipts came in "marginally" higher by 0.1 per cent. Turnover of food caterers and fast food outlets increased 12.2 per cent and 0.1 per cent respectively in July 2022. But sales of restaurants fell 1.4 per cent, while sales of cafes, food courts and other eating places declined 0.6 per cent.
Looking forward, analysts continue to expect retail sales levels to benefit from visitor arrivals and undemanding year-ago bases, especially with meetings, incentives, conferences and exhibitions events and other "big events" such as F1 races and concerts in the pipeline. The year-end holiday season is also expected to contribute to retail sales growth.
OCBC's Ling said headwinds such as manpower constraints and rising wage costs remain, adding that the latter will be affected by progressive wage model salary hikes.
Maybank's Lee, however, believes that the increase in wages will help to cushion the impact of rising prices. "We forecast retail sales to rise by around 9 per cent to 10 per cent in 2022… extending the healthy +11.1 per cent in 2021," she said.
RHB is maintaining Singapore's retail sales growth forecast at 10 per cent year on year in 2022, while CIMB's Song is "still expecting low double-digit year-on-year growth for the rest of the year".