SINGAPORE’S retail sales inched up 0.6 per cent year on year in September, significantly less than the revised 4.2 per cent growth recorded in August, data from the Department of Statistics (SingStat) showed on Friday (Nov 3). The reading was a disappointment when compared with Bloomberg’s consensus forecast of 1.6 per cent expansion.

On a month-on-month, seasonally adjusted basis, retail sales fell 1.6 per cent, reversing from the revised 1.9 per cent expansion in August.

Ongoing tourism recovery remains a key factor for retail sales growth in September and going into 2024, said UOB senior economist Alvin Liew and associate economist Jester Koh. They noted September’s further decline in visitor arrivals and the seasonal post-summer school-holiday drop in Chinese tourists.

September’s estimated total retail sales value was S$3.9 billion, with online sales accounting for 13.5 per cent of that amount.

Excluding motor vehicles, retail sales ticked up 0.5 per cent from the year-ago period, but shrank sequentially – down 0.8 per cent on a seasonally adjusted basis.

Year on year, slightly over half of the retail sales categories expanded in September.

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SingStat attributed the double-digit growth in food and alcohol to higher demand for alcoholic products – including those sold at duty-free shops. DBS economist Chua Han Teng noted that the category’s robust growth reflects the ongoing travel recovery and the positive impact from the Singapore Grand Prix.

SingStat added that higher demand for cosmetics accounted for the jump in the turnover in the cosmetics, toiletries and medical goods category.

The computer and telecommunications equipment category, which marked the largest decline, fell by the most since late 2020, noted Chua.

He attributed this to 2022’s high base, “arising from higher sales of mobile phones brought about by new product launches, which were not repeated in September 2023”.

On a month-on-month, seasonally adjusted basis, sales growth was recorded in six of the 14 categories. Petrol service stations recorded the largest increase, while motor vehicles clocked the largest sequential fall.

For 2023, the UOB duo further downgraded its retail sales growth forecast to 3 per cent, from 3.5 per cent previously. They flagged downside risks including a weakening external environment, greater-than-expected easing in labour market conditions and a slower-than-expected recovery of inbound Chinese tourists.

The team and DBS’ Chua agreed that cooler wage gains amid economic uncertainty could reduce consumers’ discretionary spending, with the UOB team noting the impact on “big-ticket items like furniture, household equipment, watches and jewellery” in particular.

OCBC chief economist Selena Ling noted that retail sales growth – at 2.9 per cent year on year for the first nine months of 2023 – may slow to about 1.5 per cent in the fourth quarter, partly on a high year-ago base. This will bring full-year retail sales growth to approximately 2.7 per cent.

“That said, 2024 retail sales should accelerate to about 4 per cent year on year, as international visitor arrivals and GDP growth improve,” she added.

Citing SingStat’s latest business expectations survey, Chua said retail trade is among the three most positive segments for the October 2023 to March 2024 period, as firms expect increased sales during the festive season.

On top of travel recovery, Chua and UOB’s Liew and Koh noted that possible front-loading of purchases ahead of the upcoming goods and services tax hike as well as support from government packages and vouchers to be disbursed in December and January could support retail sales.

Food & Beverage Services Index

Separately, sales of food and beverage (F&B) services jumped 6.9 per cent year on year in September, less than the 8.6 per cent expansion posted in the preceding month. It was down 1.7 per cent on a monthly seasonally adjusted basis.

On the year, growth was recorded across all segments of the F&B arena:

• Restaurants (3.7 per cent)

• Fast food outlets (5.5 per cent)

• Food caterers (24.1 per cent)

• Cafes, food courts and other eating places (7.2 per cent)

On a month-on-month, seasonally adjusted basis, fast food outlets (0.1 per cent) and food caterers (2.5 per cent) recorded increases, while restaurants (minus 3.3 per cent) and cafes, food courts and other eating places (minus 2 per cent) posted falls.

F&B services receipts amounted to S$983 million, with online sales accounting for an estimated 23 per cent of this sum.