No Christmas cheer as December retail sales fall more steeply than expected

Car sales took the biggest hit, tumbling 20.7 per cent year on year.
The Straits Times

It was a blue Christmas for retailers, with sales well down last December – the second consecutive month of decline.

Takings at the till were 6 per cent below those of the same month in 2017, a far sharper fall than the 3.6 per cent slide forecast by economists in a Bloomberg poll.

It was also the biggest year-on-year sales drop since January last year, when takings fell 7.7 per cent.

The full-year numbers for last year were a little better, with sales down 0.7 per cent from 2017, although turnover registered a slight increase of 1.1 per cent if motor vehicles were stripped out.

Car sales last December took the biggest hit, as they did last November, tumbling 20.7 per cent year on year.

Excluding motor vehicles, retail turnover declined 3 per cent.

Besides motor vehicles, all but one retail category saw lower year-on-year turnover.

Computer and telecommunications equipment transactions had the second-highest drop, declining 16.8 per cent year on year.

This was due to higher sales arising from major phone launches around the same period in 2017, the Department of Statistics noted when releasing the data yesterday.

Retailers of recreational goods recorded a sales slip of 5.8 per cent, while watches and jewellery were down 5.7 per cent. Furniture and household equipment turnover dropped by 3.9 per cent.

The only standout was medical goods and toiletries, which recorded an uptick in sales of 1.8 per cent from the previous year.

Maybank Kim Eng economist Lee Ju Ye said: “Consumers seem to be turning more cautious in their spending as economic growth slowed further in the fourth quarter.

“Sales of discretionary items such as watches and jewellery and recreational goods are seeing steeper declines, which are in line with anecdotal evidence by upscale watch boutiques stating that business has been quiet during the Christmas season.”

She added that the December slump could also be due to slowing tourist numbers.

She said: “November showed a sharp deceleration and passengers handled at Changi Airport have also slowed in December.

“In particular, Chinese tourists, who account for 19 per cent of total visitor arrivals, may have continued to decline in December as consumer sentiments are weakening on the back of a slowing economy and the US-China trade war.”

The total retail sales value last December was $4.3 billion, with online transactions accounting for an estimated 5.5 per cent.

Sales of food and beverage services rose 4.5 per cent last December over the same period in 2017.

The total value of these services sold last December was estimated at $925 million, compared with $886 million in December 2017.

Mr Joseph Incalcaterra, chief economist for Asean at HSBC Global Research, said the decline was surprising but also in line with trends.

“The sharp drop in retail sales in December reaffirms that private consumption likely ended 2018 on a soft note,” he noted.

“While the magnitude of the decline surprised us, the weakness is nonetheless in line with indicators such as gradually decelerating wage growth and higher domestic interest rates, which have put downward pressure on discretionary spending.”