Singapore retail sales up 1.1% in July

SINGAPORE’S retail sales grew for the sixth straight month in July, rising 1.1 per cent on year and picking up slightly from the revised 1 per cent growth recorded in June, Department of Statistics (Singstat) data showed on Tuesday (Sep 5).

The month’s growth was supported by tourist arrivals, economists said. Though lower than the median 2.1 per cent rise expected by private-sector economists polled by Bloomberg, economists still expect tourism improvements to support retail sales in the coming months.

On a month-on-month seasonally adjusted basis, retail sales rose 0.6 per cent, reversing from the 0.8 per cent contraction charted in June.

July’s estimated total retail sales value was S$3.9 billion, with online sales accounting for 12.6 per cent.

Excluding motor vehicles, retail sales still expanded by 0.4 per cent from the year-ago period, marking the 17th consecutive month of growth. However, retail sales fell sequentially, excluding motor vehicles – down 1.1 per cent on a seasonally adjusted basis.

Economists noted that July’s visitor arrivals surged to 1.4 million, the highest in the year so far. From January to July 2023, total visitor arrivals made up 69 per cent of that in the corresponding period in pre-pandemic 2019, said UOB senior economist Alvin Liew and associate economist Jester Koh.

OCBC chief economist Selena Ling added that the number of Chinese visitors to Singapore doubled from June to July, and reclaimed their top spot as a source of visitors. Chinese visitors also stayed longer, with an average stay of 4.78 days, against the average stay of 3.82 days for all international visitors.  

Economists view the continued return of tourists, especially from China, as a positive sign for the coming months.

“During Foreign Minister Wang Yi’s visit to Singapore in August 2023, Reuters reported the Chinese foreign ministry as having said that China and Singapore will accelerate the full resumption of direct flights between the countries,” said the UOB team.

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Ling added: “The ramp-up in flight capacity, especially for China ahead of the upcoming Chinese holidays, should bode well for Singapore’s tourism sector and hospitality business.”

Though concerns remain about China’s economic challenges, “this does not appear to have significantly dented the appetite for outbound tourism yet”, she said.

Large-scale events such as the Formula 1 Grand Prix, concerts and business activities will also be a draw, economists agreed.

UOB’s duo expect still-robust employment and resilient wage growth to keep domestic consumption demand supported; they added that the quarterly labour market report, due to be released in the middle of this month, may shed more light.

“In addition, disbursement of cash handouts under the GST Voucher scheme and Assurance Package could lend some support to retail sales,” they said.

DBS economist Chua Han Teng also noted the favourable base effect heading into the year-end. But he warned: “Yet, cooler wage gains amid an uncertain economic environment pose downside risks to consumers’ discretionary spending.”

UOB’s Liew and Koh also noted these downside risks. Given the recent softening in retail sales prints and elevated prices, they downgraded their full-year retail sales growth forecast to 3.5 per cent, from 5 per cent previously.

Growth in most categories

In July, most categories registered year-on-year increases, “supported by resilient labour market conditions amid a still-low unemployment rate”, said Chua.

Singstat noted that the double-digit growth in food and alcohol was due mainly to higher demand for alcoholic products, including those sold in duty-free shops.

The drag in petrol service stations came partly from lower petrol prices, it said.

But Ling highlighted: “This may partly reverse with the recent uptick in crude oil prices due to market expectations that Opec+ may also extend its production quotas, similar to what Russia is doing.”

She noted that Brent prices have risen above the July average, though remaining lower than July 2022 levels.

Ling, flagging falls in recreational goods, supermarkets and hypermarkets, as well as department stores, said they suggest shifting consumption patterns as workers increasingly return to work at the office.

On a month-on-month seasonally adjusted basis, sales in a majority of retail categories dropped. Four of the 14 categories posted gains; the supermarkets and hypermarkets category was flat.

Sales of food and beverage services climbed 6.5 per cent on the year in July, less than the 7.2 per cent expansion in the preceding month. It was up by 0.2 per cent on a monthly seasonally adjusted basis.

On the year, growth was recorded across all segments:

• Restaurants (1.7 per cent)
• Fast-food outlets (8 per cent)
• Food caterers (24 per cent)
• Cafes, food courts and other eating places (7.1 per cent)

On a seasonally adjusted monthly basis, most categories were up, except for fast-food outlets, which slid 4.7 per cent.

Food and beverage services receipts amounted to S$1 billion, with online sales accounting for an estimated 22.8 per cent.