Spending continues to slow

Growth in consumer spending continued to weaken during April, according to retail sales figures issued yesterday by the Central Statistics Office.

The figures show that the value of retail sales rose by 2.8 per cent on the same month in 2001, compared to a 3.5 per cent annual increase for March and an 8.4 per cent rise for February.

"In overall terms, the latest retail sales data suggest that, while consumer spending is still growing, the trend is relatively weak," said Mr Jim Power, chief economist at Friends First.

Mr Power said the statistics were not surprising, since prospects for the global economy remained uncertain and consumers were reacting to continued nervousness in the domestic labour market.

Mr Austin Hughes, chief economist at IIB Bank, said the figures may have been skewed by an early Easter, which could have pushed some spending out of April and into March.

He also suggested that a last-minute growth in contributions to the Government's Special Savings Incentive Scheme during April may have diverted some money away from retail spending.

On a three-month basis, which gives a more stable indication of underlying trends, the figures point to a 1.6 per cent fall in retail sales volume on the quarter ending in December.

The largest decrease in the period was in the hardware, paints and glass sector, which saw a fall of 5.7 per cent in volume terms.

The statistics also show a decline in the annual growth in retail sales volume, with a 0.5 per cent fall in April compared to a growth of 0.3 per cent in March and a 5 per cent rise in February.

Looking forward, Mr Hughes said he expected the weakening trend in retail sales to continue in coming months, adding that the softening in sterling and consequent reluctance among Northern consumers to shop in the Republic may influence this trend.