Retail sales buck trend of positive economic data
Latest barometer of high street activity suggest recovery remains modest at best
Shoppers pass a store offering Black Friday sales on Oxford Street in London, Britain. Police have been called to various supermarkets across Britain after chaos broke out during ‘Black Friday’ late night shopping. Photo: EPA/ANDY RAIN
Retail sales have again bucked the trend of positive indicators surrounding the economy, registering a 0.7 per cent drop in October, primarily on the back of falling car sales.
However, when the volatile motor sector is excluded from the picture, sales rose by 0.3 per cent on the previous month, suggesting recovery in the sector is continuing, albeit modestly.
In addition, the latest official figures show sales have risen by 5.6 per cent on an annual basis.
According to the Central Statistics Office (CSO), the sector with the largest monthly decrease in October was motor trades, where sales fell by 3.8 per cent.
This follows an unprecedented 36 per cent jump in July of this year when the new 142 registration plates came in.
Sales of hardware, paints and glass also fell 3.5 per cent last month while sales in the “other retail” category dropped 3 per cent.
Conversely, the sectors with the largest monthly increases were furniture and lighting, which rose 8 per cent, department stores (2.4 per cent) and bars (2 per cent).
“There is little doubt that the consumer environment has improved this year, but the October data flatter the situation somewhat for two reasons,” Goodbody economist Dermot O’Leary said.
He said the acceleration in annual core retail sales growth in October is partly due to “very weak base effects” in October 2013.
Mr O’Leary also noted a further fall in the estimated core price deflator on an annual basis, suggesting retailers were aggressively discounting prices to increase footfall.
Alan McQuaid from Merrion Stockbrokers said the latest figures were “a touch weaker than we expected”.
“Consumer spending remains erratic on a monthly basis though on a year-on-year comparison it is well up on the same time last year, which is very encouraging,” he said.
“There have been clear signs of stronger personal expenditure in 2014, particularly in relation to new cars, concert tickets and online internet shopping. Although there is still a general air of caution among consumers, there seems to be a view that the worst is over following the downturn of recent years,” he added.
Investec’s Philip O’Sullivan said: “Overall, while the improving trend in Irish retail sales over the past year has been well documented, it is nonetheless particularly encouraging to see that retail sales of so-called ‘big ticket’ discretionary items continue to lead the way.”
“This reflects the vast improvement in consumer sentiment, the better trends around the labour market -the Irish economy has added jobs in each of the past eight quarters, while the rate of unemployment has fallen in every month so far this year - and the Government’s recent decision to end its austerity drive.”
“We expect the above improving trends to continue into the New Year, which augurs well for Irish retailers over the busy Christmas sales period,” he added.
Retail Excellence Ireland said the latest data were, for the most part, positive.
Chief executive Seán Murphy said: “However, a major part of this growth is still being experienced within the M50.”
“The reality for many retailers in rural Ireland may not correlate with this data and it will take time in conjunction with proactive Government, and especially local government policies to support our secondary towns and villages to ensure that this recovery can take hold across the country,” he added.