August retail sales fall 4.1% from last year

Big-ticket items bear the brunt, suggesting cautious consumer spending, says expert

Takings at the till fell for the seventh straight month in August, with sales for pricey items like cars taking an especially big hit.

Retail sales dropped 4.1 per cent compared with the same month last year, not far from the 4.3 per cent decline forecast by analysts polled by Bloomberg.

If motor vehicles are excluded, the drop eases to 1 per cent, Department of Statistics data showed yesterday.

United Overseas Bank economist Barnabas Gan said: "The fall in retail sales was largely concentrated in big-ticket items, suggesting sustained cautious behaviour in consumer expenditure, given the economic slowdown."

Vehicle sales fell 20.3 per cent from August last year, reversing July's year-on-year rise of 1.5 per cent.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said: "Consumer spending has likely softened, possibly due to tightening of belts by households amid the sluggish near-term domestic growth picture and negative news headlines about the global growth slowdown and... US-China trade tensions, for example."

Furniture and household equipment were the next hardest hit, with sales dropping 9.8 per cent, followed by watches and jewellery, where turnover fell 8.6 per cent.

  • 9.8%

  • Fall in sales for furniture and household equipment, which were among the consumer items that were hardest hit. They were followed by watches and jewellery, where turnover fell 8.6 per cent.

Petrol service station revenue dipped 3.3 per cent.

However, Mr Gan said: "Other relatively inelastic consumer items such as supermarket (products), medical goods and toiletries, wearing apparel and footwear, and department store (items) continued to cushion the overall decline in retail sales."

Retailers of wearing apparel and footwear lifted takings 4.9 per cent, while sales rose 4.7 per cent at department stores and 4 per cent for sellers of medical goods and toiletries.

Sales of food and beverage services also increased, up 3.6 per cent year on year. Fast-food outlets led the way with revenue up 10 per cent over last year. Takings were up 4.9 per cent at restaurants and 3.7 per cent at food caterers.

But revenue at other eating places like cafes dipped 0.4 per cent. The total sales value of food and beverage services in August was estimated at $916 million, compared with $884 million in August last year.

Overall retail sales came in at around $3.6 billion in August, with online retailers making up an estimated 5.5 per cent of this.

Ms Ling said that even if there is a mini or partial US-China trade deal, the fundamentals that are hitting retailers will remain largely intact.

"Domestically, there also are the structural challenges of high rentals, domestic labour crunch and fickle consumers who are increasingly turning to e-commerce and online shopping," she noted.

Mr Gan said: "Given the disappointing August retail sales print as well as the overall economic slowdown seen to date, we (will) keep our retail sales growth outlook to an average of negative 2 per cent year on year in 2019."

Maybank Kim Eng economist Lee Ju Ye said a silver lining for retail sales could be an uptick in visitor arrivals. "The prolonged protest in Hong Kong has diverted leisure and business travellers to Singapore, as reflected in July and August data."