Irish Economy
Markets: Irish retail sales volume ex-motors & bars flat in year to March 2014
By Finfacts Team
Apr 28, 2014 - 12:30 PM

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Blue: All business; Green: Business ex-Motors

The volume of retail sales (i.e. excluding price effects) in March 2014 increased by 1.7% when compared with February 2014 and there was an increase of 8.9% in the annual figure.  If Motor Trades are excluded there was a decrease of 1.1% in the volume of retail sales in March 2014 when compared with February 2014 and there was an increase of 2.2% in the annual figure. 

The CSO reported today that sectors with the largest month on month volume increases were Motor Trades (+6.5%), Furniture and Lighting (+4.4%) and Department Stores (+2.0%). The sectors with the largest monthly decreases were Hardware, Paints & Glass (-3.5%), Non-Specialised Stores (-1.1%) and Pharmaceuticals Medical & Cosmetic Articles (-1.0%). (See Table 3).

There was an increase of 1.4% in the value of retail sales in March 2014 when compared with February 2014 and there was an annual increase of 6.4% when compared with March 2013. If Motor Trades are excluded, there was a monthly decrease of 1.5% in the value of retail sales and an annual decrease of 0.1%.  

Retail Ireland, the Ibec group that represents the retail sector, today said CSO figures published for retail sales in March were very disappointing and showed no change in sales in shops around the country. The value of sales, excluding motor trades and bars, stayed exactly the same compared with March 2013. There was an increase of 2.2% in the volume of those sales, the failure of growing sales volumes to translate into turnover growth is disappointing, and a clear sign of the aggressive discounting needed to grow footfall in many sectors. The data for the first quarter of 2014 show a rise in sales of only 0.5%, a disappointing result considering the low base from which sales stood in 2013. 

Stephen Lynam, Retail Ireland director said: "There was an increase in March in the sales of clothing, hardware, furniture, electrical items and books. The double digit growth in furniture sales is indicative of a stronger property market, and long may that continue. However, these increases were offset by falls in sales in supermarkets, specialised food shops like butchers, and department stores.

"The figures for the first quarter are disappointing. While any growth is welcome, an increase in the value of sales, excluding motor sales, of just 0.5% is simply not enough to create jobs and prevent store closures. 

"One of the biggest issues facing retailers is high levels of local authority rates and charges.  With the local elections on the horizon, we will be looking to candidates to outline what they intend to do to help to reduce the burden on struggling retailers."

Irish retail spending makes a healthy start to 2014: Conall Mac Coille, chief economist at Davy, commented - - "Stock indices fell on Friday: the Euro Stoxx 50 fell 1.3% and the S&P500 0.8%. Renewed tensions in Ukraine hit risk appetite. US 10-year Treasury yields fell most of the day to a trough of 2.64%, currently trading at 2.675%. German 10-year bund yields fell back below 1.5%. The euro gained against the dollar on Friday, rising close to $1.385, but fell overnight to $1.382. Irish retail sales data for March will be released this morning. Retail sales fell by 1.5% in February, but this followed rises through November (+0.7%), December (1.0%) and January (+1.9%). This meant that overall sales volumes rose by 2% in the three months to February. Even if sales are flat in March, they will still have expanded at a healthy 1.5% pace in Q1 2014.

The bounce-back in Irish retail spending has been reflected in car sales. New private cars licensed for the first time were up 27% in Q1 2014 compared with Q1 2013. Alongside the pick-up in consumer confidence surveys as Ireland approached the EU/IMF bailout, sentiment surveys also indicated that households were now ready to spend on big-ticket items including cars. The improvement in confidence is now translating into spending. Motor trades volumes were up 14.9% in the year to February, the best performing retail sector. Furniture sales, up 13.6% on the year, and electrical goods, up 5.9%, also out-performed.

In the UK, retail sales data released Friday showed a small 0.1% expansion in March. Overall, UK retail sales expanded by 1% in Q1 2014. This suggests that UK consumer spending should bounce back in Q1 after a surprisingly weak 0.4% rise in Q4 2013. Indeed, although UK GDP grew by 0.7% in Q4 2013, this was disappointingly weak given that business surveys such as the PMIs suggested an expansion of GDP in excess of 1%, or a 4% annualised pace.

In contrast, BBA mortgage approvals released on Friday were disappointing. Approvals had increased to 49,000 in January, their highest level since 2007. However, they have fallen back for two consecutive months to a four-month low of 45,933. This could suggest that activity was pushed up temporarily by the introduction of the Help-to-Buy scheme and is now falling back. Better quality borrowers may have rushed transactions before those with lower deposits could avail of the Help-to-Buy scheme. Mortgage activity could also be depressed in the coming months as banks adhere to new lending standards, checking if prospective borrowers can afford loan repayments if interest rates rise."

Economic View: State in line for €1bn from IBRC liquidation: Dermot O'Leary of Goodbody comments - - "Following the successful liquidation process, the Irish Government confirmed on Friday that it will face no further liability from IBRC. While the Government statement simply confirmed that the proceeds from the liquidation would exceed the €12.9bn of secured debt owed to NAMA, the Sunday Business Post reported yesterday that when the full sales process is complete that unsecured creditors could receive up to €1.4bn. The SBP reports that the Government is in line for 70% of this pay out, amounting to c. €1bn.

A final total will not be known until much later this year, following the decision to remarket the €1.9bn of unsold loans. On Friday, the Government confirmed that the direction to NAMA to acquire assets from the Special Liquidators was withdrawn. The re-sale will include half of mortgages included in Project Sand which were left unsold and opens up the possibility that individual borrowers will be given the opportunity to buy back their own loans.

The fact that no assets will now transfer to NAMA will lead to further questions about the future of that organisation. It wasn’t that long ago that the belief was that NAMA could increase in size by 50%, making it unlikely that the Agency could be wound down by 2020. From the State’s point of view, the supposedly insatiable appetite for Irish assets makes a fast-track wind down a real possibility."

Banks: RBS looks to investors to take stake in Ulster Bank? Eamonn Hughes and Colm Foley of Goodbody comment  -- "Press reports over the weekend (Sunday Times) indicate that RBS is about to kick off a search for private equity investors to take a stake in Ulster Bank. The process, overseen by Morgan Stanley, is expected to begin in the next few weeks and will require investors to inject hundreds of millions of pounds into Ulster in return for a large stake. A proposal under consideration appears to be bolting Ulster onto other lenders like Permanent TSB which will allow the enlarged entity to strip out costs and mount a challenge to the two main banks. Creating a larger bank with new investors could dilute RBS's stake to less than 50%, implying any future losses would not have to be consolidated on RBS's accounts.

The proposal appears targeted at getting Ulster de-consolidated from the RBS's main financial statements, but our expectation of improved profitability at the two main Irish would also apply to Ulster Bank, which should ease pressures to de-consolidate (though one can never underestimate the political motivations). We acknowledge any plan to bolt-on PTSB could potentially result in significant cost savings, but the high share of trackers at both institutions is an income headwind. In addition, any combination would require a reappraisal of valuations of the mortgages transfer, which is potentially significant, though presumably that’s why the venture requires the new equity investors.

Whilst an enlarged entity may be more profitable with cost-takeout, a stronger bank would certainly represent more of a threat to the two main banks rather than two weak ones, but only in the retail space (PTSB has no SME presence). However, it would represent further consolidation in the marketplace that may over time provide structurally improved profitability for all the main sector players."

US benchmark updates

Asia Markets

The MSCI Asia Pacific Index dropped 0.4% Monday.

Japan's Nikkei 225 fell 0.98%; China's Shanghai Composite dipped 1.62%; South Korea's KOSPI fell 0.12% and Australia's S&P/ASX 200 rose 0.09%; and in Mumbai, the Bombay Stock Exchange the S&P BSE India Sensex Index  declined 0.25%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600  is up 0.46% in early afternoon trading Monday.

In Dublin, the ISEQ  is down 0.26%.

CRH has fallen 0.34%.

European Benchmarks

Irish Share Prices

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3872 and at £0.8236.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time high of 11,771 on May 21, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 3.11%, to 1,619 points, Bloomberg report.

The BDI closed the week down 57.53% year to date to 963 and up 11.021% in 12 month period.

The index rose by 220% in 2013 to 2,237.

Global rebalancing — the tanker scrapyard index?

Crude oil for June 2014 delivery is trading on the Chicago York Mercantile Exchange (CME/Nymex) at $101.28 up 68 cents from Friday's close. In London, Brent for June 2014 delivery is trading on the International Commodities Exchange at $109.98. The North Sea benchmark accounts for two-thirds of the global market.

Finfacts, July, 15, 2013: US West Texas Intermediate oil benchmark jumps in July - - margin between WTI and Brent falls.

Gold spot price

The spot price of an oz of gold is trading on the CME in Chicago at $1,301.80 up $1.10 from Friday's closing - - the gold price fell 28% in 2013, the biggest annual plunge since 1981.

Gold had hit a record high of $1,921.15 a troy ounce on Sept 06, 2011.

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