Retail sales fall again for ninth month in October

Spending for the Christmas and Chinese New Year season is likely to result in stronger numbers this month, but it could be a brief recovery before retail outlays fall back into negative territory next month, said one observer.
Spending for the Christmas and Chinese New Year season is likely to result in stronger numbers this month, but it could be a brief recovery before retail outlays fall back into negative territory next month, said one observer.ST FILE PHOTO

But experts say it may not be all doom and gloom, with stronger data likely this month

Takings at the till slid for the ninth straight month in October, but it may not be all doom and gloom for the rest of the year, experts said.

Retail sales fell 4.3 per cent compared with the same month last year - worse than the 1.5 per cent decline predicted by analysts polled by Bloomberg and the 2.2 per cent slip in September.

If motor vehicle sales are excluded, retail sales would be down 0.6 per cent year on year, slightly worse than September's revised 0.1 per cent dip, the Department of Statistics said yesterday.

CIMB Private Banking economist Song Seng Wun said: "We might see another month of contraction in November, but the first positive (since January) could be seen in December due to the earlier Chinese New Year (in January)."

Spending for the Christmas and Chinese New Year season is likely to result in stronger numbers this month, but it could be a brief recovery before retail outlays fall back into negative territory next month, he added.

"But we might see signs of stability from the second quarter of next year," Mr Song said, noting that there could be marginal positive growth in overall retail sales.

Maybank Kim Eng economist Lee Ju Ye noted: "The (retail) sector is showing signs of bottoming out, partly due to low base effects starting in the fourth quarter of 2018 and as the labour market appears to be relatively resilient, with employment for the third quarter rising by the most in nearly five years."

She noted that the decline in retail takings was due largely to the plunge in vehicle sales and steeper falls in discretionary items such as furniture and household equipment.

Growth in watches, jewellery and F&B segments

Motor vehicle sales tumbled 22.7 per cent in October compared with the same month last year due to a smaller certificate of entitlement quota for the August to October period, the Department of Statistics said.

 
 

Furniture and household equipment revenue slid 10.6 per cent.

Mr Song said this segment has been declining since June - it could be due to a shift towards online purchases instead of relying on bricks-and-mortar retailers.

Ms Lee said: "Consumers may have been holding back on spending on some discretionary items, as (year-end) sales events gain more traction among Singaporean shoppers."

But there was a rebound in the watches and jewellery sector, with a 7.2 per cent growth.

Mr Song said the low base for the watches and jewellery segment - it saw a 6 per cent dip in October last year - could be another reason for the turnaround.

One of the bright spots in October, as it has been for most of the year, was the sales of food and beverage services, which grew 4.5 per cent.

The rise was led by a 7.9 per cent increase in turnover for fast-food outlets and 6.1 per cent climb in restaurant earnings.

The total sales value of food and beverage services in October was estimated at $893 million, compared with $854 million in the same month last year.

The outlook for the first quarter of next year appears more optimistic, said Ms Lee: "A broad-based improvement in the economy as the US and China reach a trade deal, and the uptick in tourist arrivals to Singapore due to diversion from Hong Kong will also lift consumer sentiments and support retail sales."

A version of this article appeared in the print edition of The Straits Times on December 13, 2019, with the headline 'Retail sales fall again for ninth month in October'. Print Edition | Subscribe