SINGAPORE – Retail sales in Singapore rose for the second straight month in March, although at a slower pace year on year. Most industries saw bigger takings at the till.
Economists see retail sales slowing further this quarter, but it could accelerate in the second half of the year.
Sales climbed 4.5 per cent in March from the same month a year ago, following a revised 12.6 per cent increase in February. Part of the strong year-on-year rise in February was due to the timing of Chinese New Year in 2022. It fell in February last year and some stores were closed for two days that month.
The estimated total retail sales value in March was $4.1 billion, according to figures released by the Department of Statistics on Friday. Of this, online retail sales made up an estimated 13 per cent, higher than the 12.4 per cent recorded in February.
Excluding motor vehicles, retail sales grew 4.1 per cent, smaller than the 11.6 per cent increase in February. Sales of motor vehicles rose 7.2 per cent year on year, but was flat compared with the previous month.
Month on month, total retail sales increased 2.2 per cent on a seasonally adjusted basis, compared with the 3.9 per cent rise in February.
Maybank economist Chua Hak Bin said March spending was relatively strong. “Consumers are not feeling the brunt of the economic downturn because wages and housing prices are rising, while the unemployment rate is low.
“The loan breakdown reflects this dichotomy. Credit card spending is rising by over 18 per cent while business loans are contracting.”
RHB senior economist Barnabas Gan said that while retail sales are climbing, economists remain cautious about momentum, particularly in the second quarter of 2023.
He said: “From a year-on-year perspective, retail sales have already decelerated and the deceleration might continue into the first half of this year, especially the second quarter, on the fact that we are still expecting economic growth to slow in the same period.”
However, retail sales growth is likely to accelerate in the second half of 2023, as tourism continues to improve, Mr Gan noted.
March retail sales were led by food and alcohol, with liquor sales from duty-free stores helping to drive a 55.1 per cent jump in this category.
Other top performers were apparel sales, which surged 26.5 per cent amid higher demand for bags and footwear, and department store sales that rose 16.8 per cent.
Mr Gan said that in the second half of 2023, both domestic spending and tourism will help improve overall retail sales in Singapore, especially with more clarity on the growth of the global and local economy.
He added that the industry could be further bolstered by various seasonal factors, such as the Black Friday and Singles’ Day sales events as well as the Formula 1 race in September, which could see more demand from international visitors, particularly as inbound tourism improves.
He spotlighted discretionary spending – including on cars, apparel as well as watches and jewellery – as sectors that can expect to see a stronger recovery in the second half of the year.
Maybank’s Dr Chua added that while the boost from China’s reopening is not yet visible in the March retail sales, it may pick up in the coming quarters.
The food and beverage services sector also saw continued growth in March, with sales rising 17.8 per cent in March on a year-on-year basis, following the 21.6 per cent increase in February.
The improved performance was across the board. Food caterers registered the largest growth in sales, at 80.1 per cent, due mainly to higher demand for both event and in-flight catering. This was brought on by the easing of restrictions for large-scale events, international travel as well as social gatherings.
On a month-on-month seasonally adjusted basis, sales in the F&B sector grew 0.7 per cent over February.
The total sales value of F&B services in March was estimated at $956 million. Of this, online sales of F&B services made up an estimated 24.6 per cent, higher than the 23.1 per cent recorded in February.
