Singapore retail sales growth slows to 6.2% in November

SINGAPORE’S retail sales rose 6.2 per cent on the year in November, continuing from the previous month’s 10.3 per cent growth, Department of Statistics (Singstat) data showed on Thursday (Jan 5).

UOB senior economist Alvin Liew noted that this marked the first single-digit growth after seven months.

On a month-on-month seasonally adjusted basis, retail sales were down 3.7 per cent, reversing from the 0.1 per cent growth charted in October.

November’s estimated total retail sales value was S$4 billion, with online sales accounting for 14.8 per cent. In October, online sales accounted for 13 per cent of total retail sales.

Singstat said: “The higher online retail sales proportion was mainly attributed to more sales recorded during the year-end online shopping events such as Singles’ Day (11.11) and Black Friday.”

However, Maybank economist Lee Ju Ye estimates that despite the events, year on year, online sales fell by 8.1 per cent.

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Analysts were mixed on the month’s figures. Lee said that the slower growth was in line with expectations, due to the fading reopening tailwinds and high inflation, which has likely tightened consumers’ belts.

In contrast, OCBC chief economist Selena Ling said that while a moderation was expected compared with October, November’s retail sales were below expectations.

Excluding motor vehicles, retail sales expanded by 8.7 per cent from the year-ago period, and fell 4.3 per cent from the previous month, on a seasonally-adjusted basis.

Year on year, most retail sales categories saw growth.

Discretionary spending such as wearing apparel, cosmetics, recreational goods and watches and jewellery are all “holding up well, partly due to the low base in the previous year, although there is some slippage compared with October 2022,” Ling said. RHB senior economist Barnabas Gan agreed: “Discretionary sales momentum continued to stay robust.”

Lee, on the other hand, noted that discretionary categories are “visibly slowing”, based on declines on the month.

On a month-on-month seasonally adjusted basis, a majority of retail categories recorded sales declines: department stores (-10.7 per cent); cosmetics, toiletries and medical goods (-2.9 per cent); wearing apparel and footwear (-5 per cent); recreational goods (-4.3 per cent); watches and jewellery (-7 per cent); computer and telecommunications equipment (-19.5 per cent); optical goods and books (-3.5 per cent); and others (-9.7 per cent).

Liew said that monthly declines in many discretionary spending segments could be attributed to the start of school holidays, and in turn the start of year-end holiday travel for many Singaporean households, reducing domestic spending.

For the 2022 full year, analysts forecast retail sales to rise 10 per cent, with December’s sales supported by tourism in the holiday season, year-end festive demand and potential front-loading on big-ticket item purchases ahead of Jan 1, 2023’s goods and services tax (GST) hike to 8 per cent.

But they expect the growth to moderate in 2023, highlighting growing global recession risks, elevated inflation, complex geopolitical risks and moderating domestic gross domestic product growth momentum, which will weigh on consumer sentiment.

Liew and Gan both also noted that the higher GST will likely curb discretionary spending, while the low base effect is likely to fade.

Ling expects retail sales to ease to a single-digit growth pace; Gan pencils it in at 6 per cent; Liew forecasts 2.3 per cent growth; and Lee predicts low single-digit growth of about 0 to -3 per cent.

Analysts remain uncertain of the impact of Chinese reopening, which begins Jan 8.

The eased restrictions will likely mean a gradual return to pre-pandemic tourism arrivals and expenditure levels, especially in the latter half of 2023, said Gan.

Liew said that as Singapore’s top source of tourists pre-Covid, China’s reopening could positively impact Singapore’s travel and tourism-related sectors significantly.

He noted that pent up demand and revenge travel spending could offset factors that limit the return of travellers, especially in the near term, including flight availability, expensive air fares and country specific measures on them.

“But it is difficult to quantify the impact on growth at this juncture.”

Ling said: “China’s Covid policy pivot will be interesting to watch if there is a surge in returning Chinese tourists which may contribute to increased demand for luxury goods in the coming months.”

Sales in food and beverage (F&B) services rose by 24.7 per cent year on year, lower than the 36.9 per cent increase in the preceding month. However, it fell 0.1 per cent on a monthly seasonally-adjusted basis, Singstat data showed.

On the year, growth was recorded across all segments due to 2021’s low base:

• Restaurants (22.9 per cent)
• Fast food outlets (20 per cent)
• Food caterers (138.4 per cent)
• Cafes, food courts and other eating places (14.9 per cent)

On a month-on-month, seasonally adjusted basis, the restaurants and cafes, food courts and other eating places categories declined. F&B services receipts were S$928 million, with online F&B sales accounting for an estimated 23.3 per cent.