Irish Economy 2014: The volume of retail sales (i.e. excluding price effects) in February 2014 dipped by 1.5% when compared with January 2014 and there was an increase of 5.0% in the annual figure. If Motor Trades are excluded there was a drop of 0.4% in the volume of retail sales in February 2014 when compared with January 2014 and there was an increase of 2.3% in the annual figure.
The CSO said today that sectors with the largest month on month volume increases were Clothing, Footwear & Textiles (+3.5%), Fuel (+1.4%). The sectors with the largest monthly decreases were Motor Trades (-5.7%), Electrical Goods (-2.0%) and Food beverages & Tobacco (-1.9%).
There was a fall of 1.9% in the value of retail sales in February 2014 when compared with January 2014 and there was an annual increase of 2.9% when compared with February 2013. If Motor Trades are excluded, there was a monthly drop of 0.5% in the value of retail sales and an annual increase of 0.4%.
Retail sales slip 1.5% in February, +5% on the year: David McNamara, economist at Davy, comments - - "Today’s retail sales figure show volumes down 1.5% on the month and up 5% on the year. As was the case in January, these strong annual growth figures are largely driven by a rise in car sales. As we already knew that new private car registrations were up 23% yoy in February, today’s numbers were expected. The monthly drop in volumes is primarily due to the dip in motor trades from the enormous annual growth rate of +29% in January to +14.8% in February.
Nevertheless, excluding volatile car sales, retail sales did fall 0.4% over the month, so the underlying growth in volumes has dipped early in the New Year following the 0.8% fall in January. The annual growth rate also slipped to +2.3% from +3.1% in January. At a sectoral level, department stores (+0.7% mom), fuel (+1.4%) and clothing and footwear (+3.5%) added to growth in volumes over the month, offset by monthly falls in motors (-5.7%), food & beverages (-1.9%) and electrical goods (-2.0%). So although many sectors are still higher over the year, spending has dipped in the first two months of the year. Encouragingly, consumers are now spending on bigger ticket items such as cars – pointing to more confidence in their spending power this year – but this appears, as yet, to be the expense of other discretionary purchases. The impact on consumer spending is unclear at this point.
The retail data pointed to a strong end to 2013 for consumer spending that never actually materialised. Retail sales (ex-motors) grew by 1.8% yoy in Q4, but consumer spending was down a surprising 1.3%. This pushed the annual growth rate for 2013 as a whole to -1.1%. This looks overly negative relative to the strong retail and survey data, and we suspect that this figure could eventually be revised upwards.
As we explained in our March issue of Davy Economics Monthly, Ireland’s GDP data
are extremely volatile and prone to large revisions. We had concerns regarding
the CSO’s estimate of consumer price inflation of +1.7%, which is well above the
0.5% rise in the CPI index. Again, as with aggregate GDP, the estimated 1.1%
real decline in 2013 may be missing improving trends. The nominal rise in
spending last year was 0.5%, in-line with retail sales volumes growth of 0.8% in
2013, the first expansion since the recession began. Despite the weak start, we
still expect consumer spending to pick up throughout this year as improving
trends in employment and wages are borne out in households’ disposable income."
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