Retail sales up 2.6% but figures ‘weaker than expected’

The volume of retail sales was up by 2.6 per cent during the month of August, compared with the same period last year, the latest figures from the Central Statistics Office show.

However, compared to July, the seasonally adjusted volume of retail sales was down by 3.3 per cent.

Excluding motor trades, there was an increase of 0.8 per cent in the volume of retail sales compared with July, and there was an increase of 4 per cent in the annual figure.

The sectors with the largest monthly volume increases were “other retail sales” (+7.3 per cent), as well as food, beverages and tobacco (+2.9 per cent).

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The sectors with the largest month on month volume decreases were books, newspapers and stationery (-4 per cent), and motor trades (-3.9 per cent).

There was a decrease of 1.9 per cent in the value of retail sales in August compared with July, and there was an annual increase of 1.9 per cent when compared with August 2017.

If Motor Trades are excluded, there was an increase of 0.6 per cent in the month and an increase of 3.2 per cent in the annual figure.

Merrion Stockbrokers ecomoist Alan McQuaid said the figures were “much weaker than expected”, but that consumers were continuing to “spend strongly” on an annual basis despite bank deposits being at record-highs.

“Retail sales continue to remain erratic on a monthly basis and are still swinging back and forth, but the underlying trend is positive,” he said.

“Even with the fluctuation in consumer sentiment, overall personal spending has been positive in the past couple of years, boosted by the increase in the numbers employed in the country.

“This is despite the fact that the weakness in sterling since the June 2016 Brexit referendum has enticed some shoppers to spend in Northern Ireland.”

Mr McQuaid said Brexit and its impact on currencies would be “important factors” in determining overall consumer spending patterns in the Republic over the next twelve to eighteen months.

“We are still expecting to see healthy personal consumption in the Irish economy over the remainder of this year at least and into 2019 as well as things currently stand,” he said.

For 2017 as a whole, headline sales were officially 3.9 per cent higher on average in volume terms than 2016 while core sales were 5.8 per cent higher.

“As regards 2018, we think personal spending will post another positive increase as the unemployment rate continues to drop and disposable incomes rise,” said Mr McQuaid.

“Following these latest figures, we now think headline sales will post an increase of between 3 per cent and 3.5 per cent this year, with a rise of 3.5-4 per cent projected for core sales.”