Annual retail sales fall 9% in August

ANNUAL RETAIL sales fell by 9 per cent in August, according to new figures from the Central Statistics Office (CSO).

On a monthly basis, sales fell 1 per cent compared to July.

Most sectors were hit by falling sales, with the motor trade, bars and household equipment particularly affected by the downturn.

The car trade saw volumes fall 29.1 per cent in the year, while the bar sector recorded a 13.1 per cent decline. Household equipment was down 11.4 per cent.

Sales at non-specialised stores fell 3.2 per cent, while clothing, footwear and textiles slipped 3.9 per cent.

The only sector to show an improvement was the pharmaceuticals, medical and cosmetics sector, which grew 3.3 per cent annually.

When the motor trade was excluded from figures, the volume of retail sales fell 5.2 per cent year on year, while monthly sales dropped 1.8 per cent.

In value terms, sales fell 13.4 per cent compared to August 2008 and declined 1.4 per cent in the month. Excluding the motor trade improved the decline to 10.4 per cent annually, with the monthly decrease widening to 1.6 per cent.

Chief economist with Bloxham Stockbrokers Alan McQuaid said consumer spending was hampered by a fall in disposable income and a rise in taxes and levies, although the annual rate of decline had slowed from the previous month.

“Things haven’t been helped either by the depreciation of sterling versus the euro, which has encouraged many consumers to go to Northern Ireland to do their shopping,” he said.

“Indeed, with sterling set to remain very weak in the short-term, Irish retailers will be under significant pressure to offer sizeable discounts to lure consumers back into the shops in the run-up to the key Christmas season.”

Mr McQuaid said the outlook for 2010 would be, in part, dependent on the fiscal measures in the budget on December 9th.

Goodbody economist Deirdre Ryan said the overall improvement in trends in relation to consumer spending patterns was not surprising, but warned that headwinds for consumer sector remain.

“Overall, these data indicate a relatively stronger outturn in the summer months than originally suspected, notwithstanding August’s monthly weakness,” Ms Ryan added.

“The Q2 GDP data highlighted the bulk of the decline in consumer spending had already taken place, although any significant near term bounce in spending remains unlikely also.”

Ulster Bank analyst Lynsey Clemenger said the “Ikea effect” had prevented a larger decline in retail sales in the month, as furniture and lighting sales recorded a 26 per cent rise in the aftermath of the store’s opening.

“Despite the fact that August was undoubtedly a weak month for the majority of retail sectors, there continues to be signs of stabilisation in the sector more generally,” the analysts’ note said.

Retail Ireland has called for a cut in excise duty and VAT from November 1st. Director Torlach Denihan said prices had been cut across the board and consumers were getting more for their money.