Service sector sales down 1.1% in Q1

The recreation and personal services industry reported a drop of 24.1 per cent in revenue. ST PHOTO: LIM YAOHUI

Service sector sales fell in the first quarter before the circuit breaker kicked in, with businesses such as hairdressers, beauticians and gyms taking the biggest hit.

Takings across the industry fell 1.1 per cent in the three months to March 31 from the same period last year, and down from the 4.6 per cent year-on-year growth in the fourth quarter of last year.

The recreation and personal services sector took a real hammering, with revenue plunging 24.1 per cent, Department of Statistics data showed yesterday.

This segment includes arts and entertainment companies as well as hairdressers, beauticians, gyms and retailers of household goods.

Transport and storage services takings fell 4.7 per cent, with air transport feeling the pinch due to global travel restrictions amid the Covid-19 pandemic.

Maybank Kim Eng senior economist Chua Hak Bin said the outlook for recreation and personal services firms is likely to stay weak in this quarter, and possibly longer, given that most of them are considered non-essential and will not be able to resume operations till the later stages of the economy's phased reopening.

He noted that many firms in this area, such as gyms, may not be able to operate as effectively from home, which further dampens their takings.

However, education and financial and insurance services reported revenue growth in the first quarter. Education services takings rose 5.7 per cent year on year, while financial and insurance services recorded a 3.7 per cent rise.

Meanwhile, revenue in information and communications services advanced 2.8 per cent, due mainly to firms engaged in computer programming and consultancy as well as Web hosting and Web portal operations.

Overall services takings fell 5.9 per cent in the first quarter, against the last quarter of last year. All industries, except those in the financial and insurance, and education services, registered lower quarter-on-quarter receipts.

"The service sector will probably take a larger hit in the second quarter due to the circuit breaker measures (through April and May), with perhaps only the healthcare and infocomm companies spared," Dr Chua said.

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A version of this article appeared in the print edition of The Straits Times on May 28, 2020, with the headline Service sector sales down 1.1% in Q1. Subscribe