Source: CSO

The volume of Irish retail sales (i.e. excluding price effects) decreased by 0.1% in July 2010 when compared with July 2009 and there was a monthly decrease of 0.2%. The motor trade was the only main category which showed year-on-year value increases.

The Central Statistics Office (CSO) said today that if motor trades are excluded the volume of retail sales decreased by 2.5% in July 2010 when compared with July 2009 and the monthly change was -1.0%.

There were year-on-year volume increases in Motors and Fuel and Food Businesses - -  benefitting from a public scrappage scheme - - however these were offset by decreases in the volume of Bars and Non-Food Businesses. A similar pattern was observed on a month-on-month basis. The value of retail sales decreased by 3.2% in July 2010 when compared with July 2009 and there was a month-on-month change of -0.6%. However, if Motor Trades are excluded, there was an annual decrease of 4.9% in the value of retail sales and the month-on-month change was -0.6%.

Only Motor Trades and Fuel showed year-on-year value increases in July 2010. All other sectors showed year-on-year declines in the value of retail sales - - these included:

• Non Specialised Stores (-1.5%)
• Department Stores (-7.3%)
• Pharmaceutical Medical & Cosmetics (-10.6%)
• Clothing, Footwear and Textiles (-5.7%)
• Other Retail (-8.8%)
• Bars (-13.8%)

Motor Trades, Non-Specialised Stores and Electrical Goods showed increases in the value of retail sales in July 2010 when compared with June 2010. All other sectors showed month-on-month value decreases in July 2010.

Source: Goodbody

Goodbody's chief economist, Dermot O'Leary commented:

Recent weakness in retail sales suggests caution should remain on the Irish consumer. 

Renewed weakness in retail sales - After growing for the first three months of 2010, core retail sales experienced a renewed bout of weakness over the following four months. Retail sales data out today show the volume of core sales fell by 1% in July, the third fall in the past four months. As a result, the volume of retail sales (seasonally-adjusted) was lower in July than in January.

Value of sales down 18% from peak - Important too for retail businesses is the fact that the value of retail sales continues to fall as price deflation (-2.5% yoy), albeit at a slowing pace, is widespread. In value terms, core sales are down 4.9%, but are now close to the low in the downturn, some 18% below the peak level (see chart).

Cars still the best performing sector - Among the categories, car sales continues to be the best performer, up 17% yoy, recovering impressively from the collapse in 2009. Among the rest, the only categories that saw sales volumes grow in annual terms in July were Clothing and Footwear (2.5%), Electrical Goods (4.3%) and non-specialised stores (1.6%). The improvement in sales in the Hardware, Paint and Glass category that was witnessed in March and April has reveresed, with sales volumes falling 5.8% yoy in July.

Still pressures on the consumer - The latest data suggest that caution on consumer spending prospects in Ireland is warranted. Indeed, the other piece of Irish data this morning showed a further increase of 2,500 on the Live register in August, with the unemployment rate estimated at 13.8% (up from 13.7%).

Retail Ireland, the IBEC group that represents the Irish retail sector, today said that new CSO retail sales figures for July are very disappointing.

Retail Ireland Director Torlach Denihan said: "It is very troubling that the July figures are so negative. The underlying trend of stabilisation and recovery in retail sales that was emerging earlier this year seems to be stalling. This underlines the fragile state of consumer spending and the retail sector generally.

"While the cash value of core retail sales is now over 20% less than before the start of the recession, the cost of running a retail business has not fallen, leaving retailers caught in a vice grip of high costs and much lower sales. Retailers urgently need sensible behaviour when it comes to pay, rents and service charges."

Commenting on the data, IBEC economist Reetta Suonperä said: “After a positive first quarter, the trend in retail sales began to weaken again. The volume of sales fell back into negative territory in July, with an annual fall of 0.1%. July marked the third consecutive monthly decline in the headline index.

“Core sales (excluding cars) have grown not since May and the year-on-year decline accelerated to 2.5% in July. The trend has deteriorated across all sectors, with car sales (helped by the scrappage scheme) the only sector now showing significant year-on-year growth.

“It is clear that the domestic economy remains fragile and no doubt the more muted economic news of recent months is weighing on the Irish consumer. The Government now needs to show that it has a credible strategy for the economy to help restore consumer confidence and stimulate the domestic economy,” concluded Suonperä.

Davy economist Aidan Corcoran commented:

Retail sales for July show that volumes are still struggling

• Retail sales ex-motor fell 1% month-on-month in volume in July (-2.5% on the year).

• The decline was only 0.6% in value terms. This suggests that while retail prices have broadly stabilised, volumes are still struggling somewhat.

• Of the 13 business divisions listed in the CSO release, only three recorded a monthly gain in volume (including the motor trade).

• The gain in motor trade volumes flatters the headline somewhat, bringing the monthly volume change to -0.1%.

Lynsey Clemenger, economist, Republic of Ireland  Ulster Bank Capital Markets, commented:

Irish retail sales had another poor month in July. Total sales volumes recorded a third consecutive monthly decline, albeit that it was modest at 0.2%. In spite of the renewed weakness in recent months, total sales in the second quarter are still up some 6.7% from Q1, with a large part of this improvement attributable to the recovery in car sales from extremely depressed levels. While this provides a solid basis for expecting a positive second quarter for total consumer spending, at this stage the outlook for the third quarter doesn’t look great, with the July total retail sales index running 0.4% below the Q2 average. However, we are conscious of the volatility in the monthly retail sales data and the often large revisions, and also the fact that this only covers spending on goods (i.e. they don’t track expenditure on services which accounts for some 55% of all spending)

Perhaps of greater significance is the trend in core retailing which has emerged in recent months. ‘Core’ retail sales is a measure that strips out the motor trades element, which has been the driver of the huge quarterly swings in the total retail sales data. Early-2010 seen a marked improvement in the pattern of core sales volumes, with Q1 sales up some 1.2% from the final quarter of 2009. While core sales managed a second quarterly rise of 0.3% in Q2, this was revised down from 1.1% on the initial estimate, meaning that the pick-up in underlying consumer spending is not as strong as it previously looked. July failed to show any improvement in the trend, with core sales falling by a further 1% from June, on the back of broad-based weakness across the majority of retail categories. With the July index of core retail sales running some 1.4% below the Q2 average, we will need to see a resumption of monthly increases going forward if our base case for a continued improvement in the quarter-on-quarter trajectory in consumer spending in the second half of the year is to remain on track.