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Last Updated:
Nov 16, 2009 - 1:45:11 AM |
 |
| Source: CSO |
Irish retail sales volume (i.e. excluding price effects) fell by 10.0% in September 2009 compared to September 2008. There was a monthly increase of 2.1%. If Motor Trades are excluded the volume of retail sales decreased by 6.0% in September 2009 compared to September 2008 and the monthly change was +1.5%, according to the CSO.
All sectors showed year on year volume declines with the most significant declines being:
-
Motor Trades down 29.3%
-
Non-Specialised Stores (includes supermarkets) down 3.3%
-
Clothing Footwear and Textiles down 5.9%
-
Bars down 10.0%
-
Household Equipment down 13.1%
The value of retail sales decreased by 14.8% in September 2009 compared to September 2008 and increased by 1.1% in the month. However, if Motor Trades are excluded, the annual decrease was 11.6% and the monthly change was +0.3%.
For the third quarter of 2009 the volume of retail sales decreased by 11.0% compared to the third quarter of 2008. If Motor Trades are excluded there was a year on year decrease of 5.7% in the third quarter of 2009. In the third quarter of 2009 the volume of retail sales increased by 3.4% when compared to the second quarter of 2009, however when Motor Trades are excluded the quarter on quarter increase was 0.4%.
Goodbody economist Deirdre Ryan commented: Irish retail spending moving past trough levels
Signs of stabilisation in spending coming through...- After precipitous rates of decline in the earlier part of this year, the incoming evidence continues to suggest that consumer spending is stabilising. Retail sales figures just released show sales volumes posted an impressive monthly gain of 2.1% in September, bringing the decline for the quarter as a whole to -11% yoy. This is the smallest annual decline seen this year and a marked improvement on the 22% annual decline seen in Q1 and a further improvement on Q2’s sales decline of -14% yoy.
...with core sales posting a quarterly increase in Q3...- In relation to core sales, which strips out motor trades and is our preferred measure of underlying trends in spending, the monthly volume increase was also impressive at 1.5%. This was the largest monthly increase in 12 months on this measure. Furthermore, core sales posted their first quarterly gain in Q3 following six consecutive quarters of qoq declines, with a modest rise of 0.4% in sales volumes relative to Q2.
Price deflation continues to be a feature of the retail sector- Ongoing declines in retail prices played a role in bolstering sales volumes over the third quarter. The retail sales deflator, which compares volumes to the value of goods sold, shows price deflation at -5.3% yoy in September (-6% yoy in core sales). With yesterdays CPI data showing downward pressure on consumer prices evident across a range of areas, continued price deflation in the retail sector is also set to remain a feature.
Data indicate retail spending moving past the trough- The collapse in consumer spending evident earlier this year saw overall consumption declining at an annual rate of close to -10% yoy in Q1 and -7% in Q2. While today’s retail sales data forms only half of the picture (spending on services accounts for the other half), they do suggest, nonetheless, that the Q3 outturn may show a slight further improvement in terms of the rate of decline in consumer spending.
Davy chief economist Rossa White commented:
Retail sales up in September
-
Irish retail sales rebounded in September after a weak August. The volume of total sales rose 2.1% month-on-month (mom) following a 0.8% fall in August.
-
But total sales include new cars, which have jumped around all year (the sharp drop in January was a particularly big monthly distortion at the time). So the best way to look at the underlying trend is to use the ex-garages series. Excluding garages, sales rose 1.5% after a 1.8% decline in August.
-
'Core' sales (i.e. the total volume of sales ex-garages) are now up 1.6% from April’s low. Crucially, the value of 'core' retail sales rose for only the second time in the last year, albeit by 0.3% only mom.
Irish consumer spending has stabilised since Q1
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Consumer spending has stabilised since Q1. In Q2, total consumer spending (including services as well as retail) increased 0.5% compared with Q1. Over the last few months, consumer confidence has tentatively strengthened but remains at low levels.
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This is backed up by retail sales, which seem to have bottomed last April (according to 'core' sales).
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We think a definitive bottom will be reached when the value of sales grows steadily. For now, many bigger retailers are still comfortably eating into margins that were wide heading into the recession.
Consumer spending likely to grow again in 2010
-
We expect that consumer spending will grow again in 2010, by 1.5% on average in volume. That will hide the intra-year trend, where spending will gradually strengthen heading into the second half of the next year. The savings ratio has probably peaked already at about 12% (having jumped 10 percentage points in 18 months). It may ease back towards 10% over the next 18 months as confidence gradually recovers.
Retailers react to new CSO retail sales figures
Retail Ireland, the IBEC group that represents the Irish retail sector, today said that new CSO retail sales figures show the sector continues to face serious challenges.
Retail Ireland Director Torlach Denihan said: “The value of core retail sales, excluding car, fuel and bar sales, was down 11.4% in September, whereas sales volumes were down 5.1%. This shows how prices have been cut across the board over the last year. In other words, consumers got more for their money.
"With retailers taking in less money at the tills the employment prospects for the sector are a source of very serious concern. To cope with declining sales, retailers need help to cut the costs of running their businesses. Landlords are not doing enough to cut rents and Government has done nothing to reduce the cost burden it imposes on the sector through commercial rates, waste management charges, Joint Labour Committees and the high minimum wage.
"Unless there is action in these areas, as well as pay moderation, jobs will continue to be lost over and above the 30,000 already lost in the last year. The continued weakness of sterling is an additional danger to retail employment in the run up to Christmas.
“Retail Ireland urges that the Government boosts consumer confidence through a budget that makes the necessary adjustments to the public finances through expenditure reductions. Tax increases would only lead to a further fall in consumer spending," concluded Denihan.
Ulster Bank economist Lynsey Clemenger commented:
September was a better month for the retail sector…
Following a weak performance in August, September was undoubtedly a better month for the retail sector in Ireland. The basis for this assertion is the monthly Retail Sales figures from the CSO which showed total sales volumes rose by 2.1% in the month, the largest monthly rise since February of this year. An increase in car sales, of the order of 4.5%, was the main driver of the monthly increase in retail sales. While car sales volumes are still almost 30% lower than a year earlier, they have picked up by some 30% from the low point hit in January of this year. Thus, a modest recovery in the motors sector continues, following the collapse of car sales at the start of this year.
…importantly, after a year and a half of contraction, core retail sales posted their first quarterly rise in Q3 of this year
There were also encouraging signs of an underlying improvement in retail sales in September and for the third quarter as a whole. Core retail sales (excluding motors) rose by 1.5% from August, driven by an increase in sales of electrical goods, fuel, food and items such as mobile phones, toys and jewellery. Importantly, looking at the period Jul-Sep, core retail sales posted their first quarterly rise since Q4 2007. Therefore, after a year and a half of shocking weakness, signs of stabilisation in consumer spending are becoming increasingly evident. The sectors contributing to this better quarterly performance included clothing and footwear, household goods, and department stores, each of which experienced higher sales volumes in Q3 relative to Q2.
While retail sales volumes are indicative of the direction of real consumer spending in any given month, it is sales values that are of most relevance from a retailer’s perspective. According to this measure, retailers outside of motors received some modest reprieve in September, with core sales values rising by 0.3% from August. However, for Q3 as a whole values fell for the sixth quarter running, indicative of the ongoing intense price deflation in the retail sector.
…more encouraging signs in the retail sales data of late ties in with other indicators of the Irish economy also showing stabilisation
These latest signs of stabilisation are both welcome and encouraging, after the prolonged period of significant weakness gone before. The retail sales data of late is not the only indication we have that the economy in the process of stabilising, with the Live Register also showing increasingly less negative trends also. Importantly, the improvement in the Live Register data does appear to be having some impact on consumer spending. While we do not have up to date figures on services spending, the latest indications from the retail sales data suggest overall consumer spending may well show its second consecutive quarterly rise when the Q3 Quarterly National Accounts are released next month. At this stage, it also seems likely that consumer spending will post a smaller decline than the 7.5% average fall for 2009 we had been pencilling in up to now.
|
Retail Sales Volumes by Sector (seas adj) |
Q2 2009 |
Q3 2009 |
Sep-09 |
|
% qoq |
% yoy |
% qoq |
% yoy |
% mom |
% yoy |
|
Food Businesses |
-0.5% |
-4.6% |
-0.5% |
-3.1% |
-10.0% |
-3.3% |
|
Pharma, Med & Cosmetics |
1.3% |
2.3% |
-2.0% |
-0.8% |
-1.8% |
-3.5% |
|
Clothing, Footwear & Textiles |
-5.8% |
-9.8% |
4.2% |
-6.1% |
-1.1% |
-5.9% |
|
Household Equipment |
-6.6% |
-19.7% |
0.9% |
-14.0% |
-60.0% |
-13.1% |
|
Bars |
-4.5% |
-11.5% |
-2.4% |
-10.9% |
-1.0% |
-10.0% |
|
Department Stores |
0.4% |
-5.7% |
0.8% |
-2.6% |
-1.6% |
-4.2% |
|
Other Goods |
-1.6% |
-9.6% |
-0.6% |
-5.9% |
0.9% |
-8.1% |
|
Fuel |
-1.8% |
-8.1% |
-1.6% |
-6.8% |
4.9% |
-7.8% |
|
Total excl Motor Trades |
-3.2% |
-7.9% |
0.4% |
-5.7% |
1.5% |
-6.0% |
|
Motor Trades |
10.2% |
-39.2% |
8.6% |
-35.8% |
4.5% |
-29.3% |
|
Total Retail Sales |
4.3% |
-13.9% |
3.4% |
-11.0% |
2.1% |
-10.0% |
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