Motor trade drives total retail sales up by 6%

RETAIL SALES increased in April as motorists returned to garage forecourts, but “core” sales excluding cars were less buoyant.

The latest figures from the Central Statistics Office (CSO) show that total retail sales increased 6 per cent in the year to April – the first year-on-year increase in retail sales in more than two years.

The increase was predominantly driven by an increase in motor sales. If motor trades are excluded, the volume of core retail sales increased by just 0.3 per cent in April compared to a year earlier. The volume of core sales fell 0.2 per cent compared to March.

“Quite clearly, the big winner this year as regards consumer spending will be the motor industry,” said Bloxham economist Alan McQuaid.

“Already new car sales in 2010 to date are higher than for the whole of 2009.”

The value of retail sales over the past year has been more modest than the increase in retail sales volumes, as retailers were forced to cut prices to attract customers.

The value of retail sales increased by 1.6 per cent in April 2010 compared to April 2009 while there was a monthly increase of 0.7 per cent. This is the first year-on-year increase in the value of retail sales since February 2008, the CSO noted.

However, if motor trades are excluded, there was an annual decrease of 3.6 per cent and the monthly change was minus 0.2 per cent.

Although the more positive trends were driven by car sales, which are up 35.4 per cent annually in volume terms, most sectors are now showing year-on-year increases.

Sales volumes at department stores are up 8 per cent compared to April 2009, although the value of these sales is down 2.4 per cent, again reflecting discounting by retailers as the Irish economy sank into deflation.

Bar sales remain subdued, with volumes down almost 10 per cent over the year.

Retail Excellence Ireland welcomed yesterday’s figures although chief executive David Fitzsimons said the results have to be considered in the context of an overall decline of nearly 30 per cent from 2008 levels.

“Nonetheless, we look forward to what will hopefully be a return to continuous and increasing month-on-month growth for the rest of 2010 and beyond,” he said.

Employers’ representative group, Ibec said the figures showed some positive signs, but it added that sales were still at a low ebb.

Ulster Bank economist Simon Barry said the monthly decline in core sales volumes in April was “a slightly disappointing outcome” as it broke a run of three monthly increases.

However, economists yesterday forecast that consumer spending trends will improve over the course of the year.

The latest retail data is “consistent with ongoing, if modest, improvement in underlying consumer trends”, Mr Barry added.

“This is a pattern that has its origins in a gradual improvement in consumer confidence, which in turn is translating into less precautionary saving among Irish households.”