Retail sales stay subdued as motor purchases plunge

RETAIL SALES remained subdued in July as spending on cars plunged after the Government’s car scrappage scheme came to an end.

The volume of sales fell 0.5 per cent compared to June and 0.6 per cent annually, the latest index from the Central Statistics Office shows.

However, there were some crumbs of comfort in the figures for retailers amid what is likely to be a fourth consecutive year of decline in personal spending.

Excluding motor sales, the volume of “core” retail sales actually rose 0.5 per cent. Business group Ibec attributed this to an improvement in the number of tourists visiting Ireland.

On an annual basis, core retail sales volumes, which exclude the effect of price changes, are down 2.3 per cent, while the value of core sales is down 1.2 per cent.

Motor sales volumes plunged 8.4 per cent in July after two months of increased sales ahead of the expiry of the scrappage scheme on June 30th.

Over the course of the year, sales of cars and other vehicles are the best-performing category of retail sales, up 7.1 per cent annually.

“Retailers can breathe a sigh of relief that temporary Government support to the import-intensive motor trade sector has now ended,” said Davy economist Conall Mac Coille.

Ibec economist Reetta Suonperä said the summer months had proved “somewhat less grim” than the early part of the year.

“It is likely that the improved tourism numbers have provided some small boost for the sector; the recovery in bar sales would certainly point in that direction,” she said. Bar sales nudged up 3.3 per cent in July.

However, consumer confidence remained close to all-time lows, she added. “All Government decisions should be assessed for the impact they will have on the domestic economy. The forthcoming budget in particular should be designed to cause least damage to growth.”

Consumer sentiment is set to remain weak for the rest of 2011, economist Alan McQuaid of Bloxham Stockbrokers forecast, citing continued high levels of personal indebtedness and the erosion of disposable incomes.

“Consumer spending is likely to maintain the downward trend of recent years with declining real disposable incomes being the main driver,” he said.

Mr McQuaid predicted a fourth year of decline in personal spending in real terms in 2011, and that households would “remain in cautious mode” next year.

Most categories of retail sales remain in decline over an annual basis, with sales of food, beverages and tobacco down 2.7 per cent; furniture and lighting down 6.2 per cent; department stores down 3.4 per cent; hardware, paints and glass down 6.3 per cent; electrical goods down 5 per cent; and books, newspapers and stationery down 9.5 per cent.