Annual decline in retail sales now at 21%, says CSO

A COLLAPSE in car sales and sharp declines in housing-related purchases contributed to a 21 per cent annual fall in retail sales in the year to February, according to data published yesterday by the Central Statistics Office (CSO).

Consumer spending remained in the doldrums, although there was an increase in sales during the month compared to a disastrous January, when the annual rate of decline in volumes hit 27 per cent.

A 53 per cent dip in car sales was largely responsible for the annual declines, although all categories of retail sales measured by the CSO are in negative territory. Excluding motors, retail sales are declining at an annual rate of 6.9 per cent after a surprise 1.3 per cent rise during February.

It was a bad month for department stores, with sales volumes falling 8.5 per cent. However, the value of sales in department stores showed even greater declines, down 12 per cent during the month – suggesting that stores slashed prices in a bid to get consumers to part with their cash, but to little avail.

Bar sales were also subdued during the month and are now running 11 per cent lower than they were a year ago.

Retail sectors affected by the standstill in the housing market continued to be hit hard. Furniture and lighting sales increased during February, after stores offered heavy discounts, but are still down 22 per cent on an annual basis, while sales of electrical goods also rose slightly during the month but fell 5 per cent over the year.

Retail Ireland, the group that represents employers in the retail sector, said it expected that at least 25,000 employees would be laid off in 2009 as a result of the collapse in spending.

Retail Ireland director Torlach Denihan urged the Government to introduce a reduction in VAT for a specific period.

Although economists noted the improvement in sales in February compared to January, with total sales rising 5.7 per cent during the month, they were reluctant to say that the higher activity at the shop tills was a sign of any recovery.

Retail sales, which represent half of consumer spending, and spending on services are expected to remain under severe pressure.

“The sharp pull-back in consumer spending seen over recent months shows little signs of easing,” said Goodbody Stockbrokers economist Deirdre Ryan.

“Even the more resilient spending areas have been affected to some degree, given the 5.5 per cent fall in food volumes in the quarter to February,” Ms Ryan commented.

Ulster Bank economist Lynsey Clemenger said the additional expected job losses in the economy this year implied that spending would remain depressed for the foreseeable future.

“It will be some time to come before any credible green shoots emerge in Ireland,” she said.