No CNY boom for retail in February

Car sales rose 51.3 per cent, due to lower COE prices. The need to fund this purchase could have been why people cut down on spending in other areas.
Car sales rose 51.3 per cent, due to lower COE prices. The need to fund this purchase could have been why people cut down on spending in other areas. ST FILE PHOTO

Sales down 3.2 % year on year, with F&B seeing the sharpest decline

Chinese New Year failed to boost retail takings in February, with sales falling 3.2 per cent over the same month last year, the Department of Statistics said yesterday.

The latest data was dragged down by factors such as a 34.7 per cent plunge in food and beverage sales - the sharpest area of decline.

Car sales were the silver lining, surging 51.3 per cent - thanks to lower certificate of entitlement (COE) prices, coupled with a trend to buy cars in the festive season.

If car sales were stripped out, retail sales would be down 9.6 per cent.

Analysts polled by Bloomberg had expected retail sales to rise 3.4 per cent year on year and dip 1.5 per cent without auto sales.

February's retail health seemed to be slightly better than January's, when total shop receipts grew 1.7 per cent, but then fell 1.1 per cent after car sales were stripped out.

The total retail sales value in February was estimated at $3.4 billion, lower than the $3.5 billion in the same period a year earlier.

Credit Suisse economist Michael Wan said overall retail sales were very weak, and even after factoring in car sales, "it doesn't seem like anything fantastic".

He said: "Partly, people are cutting down on discretionary spending, such as at restaurants. Fast-food places are still doing well but restaurant sales are coming down."

Restaurant sales fell 6.8 per cent in February year on year, while sales at fast-food outlets were up 2.8 per cent, along with other eating places like cafes, up 4.8 per cent.

Total spending on food and beverage services in February was about $677 million, lower than the $690 million in February last year.

Department store sales dropped 10.5 per cent in February from the same month a year earlier, while supermarket sales fell 7.1 per cent.

Sales of discretionary items, such as watches and jewellery, fell 12.4 per cent in February.

The second sharpest decline was posted by telecommunications apparatus and computer sellers, which slumped 16.6 per cent.

Mr Wan said: "Motor vehicle sales are driven by the supply side such as the 10-year COE, since it's such a big-ticket item.

"Also, car owners have to pay high down-payments for cars because of loan regulations. This encourages people to cut down on non-essential spending to fund this purchase."

A version of this article appeared in the print edition of The Straits Times on April 16, 2016, with the headline 'No CNY boom for retail in February'. Print Edition | Subscribe