Retail sales jump 5.2% in Aug over July

Rise is biggest monthly increase since Feb, but still a drop year on year

CONSUMERS hit the shops in August to spend $2.6 billion on cars, petrol, clothes, watches and jewellery, among other things.

They spent 5.2 per cent more on retail goods in August than in July, the biggest monthly increase since February, according to the Department of Statistics (DOS) yesterday.

Retail sales were still lower than in August last year – coincidentally also by 5.2 per cent – but this was the smallest decrease in eight months.

Some economists see the figures as a positive sign that consumer spending is turning the corner to a sustained recovery.

‘Is the Singapore consumer back? It is beginning to look that way,’ said HSBC economist Robert Prior-Wandesforde.

For one thing, Singaporeans are starting to feel more wealthy, he said.

The stock market is up 55 per cent this year, private home prices recently posted their biggest quarterly jump in 20 years and HDB resale flat prices are at an all-time high. Employment is also stabilising and confidence is rising, said Mr Prior-Wandesforde.

‘It looks to us that the fundamentals are stacking up for an ongoing improvement in consumer spending, which will complement the strong recovery in exports.’

Car showrooms rang up 13.2 per cent more sales in August over July, while petrol stations sold 7.2 per cent more fuel. But car sales were down 11.6 per cent on August last year, while petrol was 13.8 per cent down.

Excluding cars, retail sales would have risen by just 1 per cent between July and August, and fallen by 3 per cent in the year to August, said the DOS.

Singaporeans may have brought forward their car purchases ahead of a widely expected reduction in certificates of entitlement (COEs) which was announced last month, said Citigroup economist Kit Wei Zheng.

Retailers of clothes and footwear also chalked up 10.9 per cent more sales in August than in July, while watch and jewellery shops saw a 4.7 per cent rise in sales.

Consumers also bought more from supermarkets, department stores and shops selling furniture, household equipment, medical goods and toiletries.

The rise in retail sales is in line with the gradual economic recovery and reflects consumers’ increasing willingness to spend, said DBS economist Irvin Seah.

‘Consumer sentiment has improved significantly over the last few months, which is why we are seeing sales of big-ticket items like cars increase despite the rise in COE prices,’ he said.

While retail sales will continue to be bumpy over the next few months, the long-term trend should head upwards, Mr Seah said.

The upcoming Christmas season, traditionally a bumper time for retailers, is likely to be better than previously expected as confidence grows in the economic recovery underway, he said.

Source : Straits Times – 16 Oct 2009