Retail sales to further decline this year

Retail sales fell 0.6 per cent in November from the previous month, with economists predicting that spending will fall further in 2008.

The decline in retail sales was the first monthly drop since August last year, and compared to a 0.4 per cent increase in October, according to figures released yesterday by the Central Statistics Office (CSO).

The effect was to push the annual rate of retail sales growth down to 3.9 per cent from 4.9 per cent in September. Annual sales growth peaked in May at 10 per cent.

Spending on vehicles was a significant factor in the faltering retail performance, dropping 4.4 per cent by volume in November, compared to a 1.1 per cent increase in October. Stripping out the effect of vehicle sales, retail sales growth for the year to the end of November was a more healthy 5.5 per cent.

Hardware, paints and glass sales jumped 5.2 per cent, while the poorest performer was the bar and pub sector, which saw a fall of 5.3 per cent on the month compared to a 2.3 per cent increase in October.

Overall, the total value of retail spending fell by 0.2 per cent in November, bringing the annual increase down to 6.2 per cent from 6.5 per cent in October.

Goodbody Stockbrokers economist Deirdre Ryan said the figures pointed to the possibility of further falls in consumer spending. "Anecdotal reports suggest that sales during the Christmas period came in below expectations so there are certainly signs of consumer weakness coming through."

Ms Ryan said she expected figures for the end of 2007 to record a 6 per cent increase in annual retail spending, halving this year to 3 per cent. This is in line with Ulster Bank's 2008 forecast.

Bloxham economist Alan McQuaid was confident that disposable income growth would remain "reasonably strong" this year, provided there was some insulation to an expected fall in employment growth.

"However, with consumers worried about job prospects, it is quite likely that the average increase in personal spending will be well down on 2007," he said.