Retail sales fall 2.1% in May, sliding for 4th straight month

Most retail segments registered a fall in sales compared with May last year. An analyst said economists had hoped for an improvement in retail sales later in the year, but this now seems unlikely. ST PHOTO: MARK CHEONG
Most retail segments registered a fall in sales compared with May last year. An analyst said economists had hoped for an improvement in retail sales later in the year, but this now seems unlikely. ST PHOTO: MARK CHEONG

Takings at the till dropped for the fourth consecutive month in May as wary consumers kept a tight rein on their purse strings.

Retail sales slid 2.1 per cent over the same period last year, according to figures released by the Department of Statistics yesterday, although that still beat the expectations of analysts in Bloomberg, who tipped a fall of 3 per cent.

If motor vehicles are excluded, sales would have dropped 1 per cent year on year against a 2.1 per cent fall in April.

Maybank Kim Eng economist Lee Ju Ye said: "The continued decline in retail sales reflects weakening consumer sentiments as the US-China trade tensions remain unresolved and the growth outlook darkens.

"The increase in retrenchments in the first quarter due to the downturn in industries such as manufacturing, wholesale trade and transportation and storage may also be weighing down consumer spending."

Mr Joseph Incalcaterra, chief Asean economist of HSBC global research, added: "While weak export data dominates the headlines, the retail sector is a clear under-performer.

"The continued contraction in retail sales through May likely contributed to the sequential fall in services gross domestic product in the second quarter, and likely reflects slowing domestic demand and a possible deterioration in the labour market in the second quarter."

 
 
 

Most retail segments registered a fall in sales compared with May last year. Takings for motor vehicles and retailers of furniture and household equipment fell the most - 7.5 per cent - while sales of computer and telecommunications equipment declined 7 per cent.

Sellers of optical goods and books recorded a sales decline of 4.9 per cent, while department stores were down 4.7 per cent.

However, sales of watches and jewellery grew by 4.1 per cent, due partly to higher demand for gold jewellery arising from the Akshaya Tritiya festival, the Department of Statistics noted.

Takings at petrol service stations increased 1.4 per cent, although that was in part due to price changes as the actual volume of fuel sold fell 0.6 per cent.

Food and beverage services takings grew 2 per cent year on year, with restaurants leading the way with a 2.7 per cent increase. Other eating places such as cafes lifted sales by 2.2 per cent, while fast-food outlets saw takings rise 1.8 per cent, but caterers were down 1.2 per cent.

The total sales value of food and beverage services in May was estimated at $849 million compared with $833 million in the same month last year.

May's estimated total retail sales value was about $3.7 billion with online making up about 5.3 per cent of this. Analysts remain cautious regarding the retail outlook for the rest of the year.

Mr Incalcaterra said: "With pro-consumer Budget measures likely to take effect in the second half, we may see some small rebound in spending later this year, but the data nonetheless tells us that private consumption growth is fal-ling sharply compared with the last two years."

Ms Lee said economists had hoped for an improvement in retail turnover this year supported by the strong rebound in car sales due to a low base effect from last year and sentiment boost from the Merdeka Generation Package.

"But this looks increasingly unlikely as the outlook darkens and consumers hold back on spending. In particular, sales of discretionary items such as furniture and household equipment, computer and telecommunications equipment, and watches and jewellery, will likely see a steeper decline as consumer sentiments weaken."

A version of this article appeared in the print edition of The Straits Times on July 13, 2019, with the headline 'Retail sales fall 2.1% in May, sliding for 4th straight month'. Print Edition | Subscribe