Vehicle sales boost figures; economist credits F1 event too
By
Tessa Wong & Jessica Lim
One of Citigroup's senior economists, Mr Kit Wei Zheng, attributed the good performance to a surge in tourist arrivals for the world's first Formula One night race, from Sept 26 to 28. -- ST PHOTO: DESMOND LIM
BOOSTED by high motor vehicle sales, retailers here turned in an unexpectedly good performance in September.
Overall retail sales here rose by 6.8 per cent for the month compared to August, figures released by the Department of Statistics yesterday showed.
September was also a good month when compared to the same period last year: Sales rose 7.2 per cent year-on-year, according to the Retail Sales Index.
The figures have left some economists scratching their heads. Many expected that sales would be hit by spending cutbacks, since the turmoil that has roiled world financial markets began in the middle of that month, when investment bank Lehman Brothers went under and insurance giant AIG almost followed suit.
Citigroup called the figures 'surprising' in a report yesterday.
One of its senior economists, Mr Kit Wei Zheng, attributed the good performance to a surge in tourist arrivals for the world's first Formula One night race, from Sept 26 to 28.
'There may have been a temporary lift in spending during the F1 period. It would not have been very large, but there was something,' said Mr Kit.
Official figures put the big blip in retail figures down to motor vehicle sales, which jumped almost 30 per cent.
If these were excluded, the gloss would have been taken off the numbers: Overall sales would have dropped 0.8 per cent.
Most other sectors, in fact, registered declines, even traditionally stable ones like supermarkets.
But a few showed an uptick, including furniture and household equipment, computers and telecommunication apparatus and medical goods and toiletries.
The good news may not last long, however, as economists believe the retail market is softening.
In its report, Citigroup said that sales volume is expected to be lower in the coming months 'as consumers are likely to tighten their belts on growing signs of a prolonged recession'.
Such signs are already popping up.
Results of a retail survey carried out in September by Mastercard and released earlier this week found that 64 per cent of consumers here would cut spending on non-essential items in the next six months.
On their part, retailers say business is still stable - for now.
They are sticking to their marketing plans for the year-end, traditionally a highlight of their business year, and will review the situation only if sales fall off the cliff.
Mr Phillip Overmyer, chief executive of the Singapore International Chamber of Commerce, said: 'It's highly unlikely that retail sales at the end of this year will be as good as last year's.
'The challenge now is getting through this by structuring costs and getting people to start spending now,' he said.
