Cars and alcohol driving Irish consumer recovery
The volume of Irish retail sales (i.e. excluding price effects) increased by 11.6% in July 2015 when compared with June 2015 and there was an increase of 9.9% in the annual figure. If Motor Trades are excluded, there was an increase of 0.6% in the volume of retail sales in July 2015 when compared with June 2015 and there was an increase of 6.6% in the annual figure.
Sales of alcohol have also surged according to the CSO — the statistics agency does not provide a breakdown of pub sales but we can safely say that alcohol dominated.
A Finfacts analysis on Thursday showed that the tradeable exporting sectors were responsible for few jobs in the period from the end of 2012 to June 2015.
The CSO reported that the sectors with the largest month on month volume increases were Motor Trades (+22.9%), Furniture & Lighting (+6.7%) and Bars (+4.4%). The sectors with the largest monthly decreases were Hardware, Paints & Glass (-3.5%), Books, Newspapers and Stationery (-2.4%) and Food, Beverages & Tobacco (-1.4%).
There was an increase of 9.4% in the value of retail sales in July 2015 when compared with June 2015 and there was an annual increase of 6.5% when compared with July 2014. If Motor Trades are excluded, there was a monthly increase of 0.3% in the value of retail sales and an annual increase of 3.3%.
Dermot O'Leary, chief economist at Goodbody, commented: Consumer momentum continues into Q3 — "Positive momentum in Irish consumer spending continued into the third quarter of the year. CSO data released today shows that retail sales volumes grew by 9.9% yoy in July (+4.4% in June). Although this is helped by the boom in car sales (+19% yoy), core sales volumes also grew impressively in July (+6.6% yoy relative to +5.0% yoy in June). The combination of gains in employment and earnings and rising consumer confidence is confirmation that the Irish consumer remains in a sweet spot.
Car sales driving the expansion — The fastest growing area is motor vehicles (+19% yoy). Due to the registration system in Ireland, January and July are the biggest selling months for this sector. The growth in this big-ticket area is a confirmation of the improvement in consumer confidence and belief about the sustainability of the recovery in the labour market.
Broad-based growth being seen — Growth is broad-based, with only one sector (Food & beverages, -2% yoy) seeing declines on an annual basis. Outside of cars, the fastest growing categories are electrical goods (+14% yoy) and furniture and lighting (+14% yoy). DIY spending (proxied by the hardware, paints and glass category) was quite weak in July (+0.5% yoy). This is consistent with comments from Grafton Group (Ireland’s largest DIY retailer) this week, but they also noted that there has been a pick-up in growth in August in this area.
Irish going back to the pub — Bar sales are also enjoying renewed buoyancy, a sign that discretionary spending is also on the up. Bar sales volumes increased by 11% yoy in July, the fastest rate of growth since at least 2005. Sales of clothing and footwear also grew in double-digit territory in July.
Price deflation still a feature — Deflation continues to be a feature in the vast majority of the retail sales categories. Overall, prices in the retail sector fell by 3% over the past year, similar to rates of deflation seen since the start of the year. The only category that has seen prices increase is newspapers and stationary (+1.5% yoy), while the greatest degree of price deflation is in the “Other” category. Price deflation can be seen as one small concern for retailers in an otherwise healthy retail sales report."