Retail sales rebound in Jan, driven by higher car sales

Takings up 7.6% after two months of decline, beating analyst expectations of 2.6% increase

The Singapore Motorshow in January helped boost car sales for the month, up 20 per cent from last year, noted SingStat.
The Singapore Motorshow in January helped boost car sales for the month, up 20 per cent from last year, noted SingStat.ST PHOTO: KUA CHEE SIONG

Retail sales staged a comeback in January after two straight months of decline.

Takings at the till were 7.6 per cent higher than those of the same month last year - a robust result that beat the expectations of analysts polled by Bloomberg, who predicted a 2.6 per cent rise.

The increase came on the back of higher car sales, which rose 20 per cent over last year. This was partly due to the Singapore Motorshow, the Department of Statistics (SingStat) noted yesterday.

Analysts added that the rise was also due to the low base in January last year and the festive season.

Maybank Kim Eng economist Lee Ju Ye said: "The year-on-year rebound in January was mainly due to the... recovery of motor vehicle sales, which comes from a low base as sales entered negative territory starting January 2018 (as the new Vehicular Emissions Scheme kicked in).

"It would be too early to state that consumer sentiments have turned positive, as January numbers could be distorted by the Chinese New Year effect."

If motor vehicle sales are excluded, retail takings rose 5.3 per cent in January, a "result of higher demand during the pre-Chinese New Year season", SingStat said.

Retailers of wearing apparel and footwear saw revenue leap 10.5 per cent compared with last year, while medical goods and toiletries were up 9.3 per cent.

Department store tills rang up an 8.9 per cent rise, just ahead of supermarkets and hypermarkets on 8.8 per cent.

Food retailers also raked in higher sales - up 8 per cent.

Food and beverage services saw an increase of 5.9 per cent year on year, with fast-food outlets and caterers seeing the biggest jump.

The total sales value of food and beverage services in January was estimated at $862 million, compared with $814 million last year.

However, computer and telecommunications equipment revenue slid 11.5 per cent, due partly to lower demand for mobile phones.

Total retail sales hit $4.2 billion in value in January, with online comprising an estimated 4.8 per cent.

Ms Lee said analysts expect overall retail sales to post a small rebound this year following the 0.7 per cent decline last year, mainly due to the low base of motor vehicle sales.

She added: "Consumer sentiments may see some improvement in the second half of the year after the Merdeka Generation Package benefits are made available, similar to the uptick we saw when the Pioneer Generation Package was rolled out in the second half of 2014.

"However, we are also cautious that a slowing economy could eventually weigh on the labour market, resulting in a dent in consumer confidence."

United Overseas Bank economist Barnabas Gan said the retail environment will closely hinge on domestic economic fundamentals.

"(This) includes income levels, labour conditions and overall economic confidence, while foreign drivers, including tourism arrival numbers, could drive the sales in specific clusters," he added.

"Meanwhile, sales of motor vehicles into the year could tip into positive growth print, after 2018's low base... even as certificate of entitlement premiums for all categories rose in the latest week, suggesting some renewed vehicle demand in the first quarter of the year."

A version of this article appeared in the print edition of The Straits Times on March 13, 2019, with the headline 'Retail sales rebound in Jan, driven by higher car sales'. Subscribe