Source: CSO

The volume of Irish retail sales (i.e. excluding price effects) increased by 2.1% in December 2011 when compared with November 2011 and there was an annual increase of 3.0%. If Motor Trades are excluded, the volume of retail sales increased by 0.2% in December 2011 when compared with November 2011, while there was an annual increase of 0.6%.

The Central Statistics Office said today: Among the main contributors to the monthly increase are Motor Trades (+26.3%), Department Stores (+8.1%), Bars (+2.7%) and Non Specialised Stores (+0.4%). Monthly decreases were recorded in Furniture & lighting (-5.6%), Other Retail Sales (-3.6%) and Food, Beverages & Tobacco in specialised stores (-3.2%).

The value of retail sales increased by 2.9% in December 2011 when compared with November 2011 and there was an annual change of +3.4%. If Motor Trades are excluded, there was a monthly decrease of 0.1% in the value of retail sales and an annual change of +1.0%.

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

Weak comparisons due to the weather make identification of trends difficult, but the steep decline in Irish retail sales seems to have slowed. 

Sales up but weather effects playing an important role– Given the weak comparatives due to poor weather in November and December 2010, we expected an improvement in annual retail sales trends at the end of 2011. As it turned out, the improvements were slightly better than we expected, with gains also recorded on a monthly basis. In December, sales volumes rose by 2.1% mom, with sales excluding the motor trade (core sales) rising by 0.2% mom. The volume of core sales was up by 0.6% yoy (-0.8% yoy in November), its best annual performance since May 2010. Due to weather distortions, it would be wrong to suggest that this is the beginning of a sustainable trend just yet. 
  
Christmas shopping showed a more normal pattern in 2011 - The weather-effect can be seen clearly in some of the important categories in the Chirstmas shopping period. Sales of Clothing and Footwear increased by 3.6% yoy, its best performance since November 2010, while sales of Electrical goods were up 9% yoy. Anecdotal evidence suggested that bars had a good Christmas period; however, sales volumes in this category were still down by 1.7% yoy in December. 

Retail sales still likely to fall in 2012 - Given the difficulty in comparing annual trends, comparing changes over a two-year period may be more appropriate (i.e. stripping out abnormal weather trends). On this basis, core sales volumes were down by 1.7% in December 2011 relative to December 2009, indicating that the retail environment still remains quite depressed, albeit the rate of decline is slower than witnessed earlier in 2011. We still believe that retail sales will fall c.3% in 2012, with the drag of falling employment in particular, along with the 2% VAT increase, stopping any material improvement.

IBEC, the business lobby group, today said that the latest retail sales figures show that 2012 ended on a brighter note for the sector, but that Government must focus on measures to stimulate growth in the domestic economy and support job creation.

Source: Goodbody

Commenting on the data, IBEC senior economist Reetta Suonperä said:“Latest figures from the CSO show that 2011 ended on a slightly more positive note for the retail sector. Excluding motor trades, sales increased by 0.6% compared with December 2010. This annual increase was expected, given the exceptionally weak sales in December 2010, due to the adverse weather conditions at the time. 

"The monthly increase was just 0.2%, but taking account of strong performance in November, sales in the final quarter increased by 1.2%. This was the first instance of quarterly growth since the first quarter of 2010. Consumer confidence will be the key driver of sales this year. Given recent ECB interest rate cuts and the fact that the budget did not increase income taxes, a rebound in confidence could result in a brighter outlook for the retail sector." 

David McNamara, economist at Davy commented:

Retail sales volumes up by 2.1% in December

• Retail sales volumes increased 2.1% in December. This rise followed a 1.8% increase in November and a 0.4% increase in October;
• Retail sales have now risen by 3% on the year;
• Sales volumes for the year were up on the previous peak in June, when sales benefited from the expiry of the car scrappage scheme.

Retail sales excluding the motor trades sector also rose

• Excluding the volatile motor trades sector, sales volumes rose by 0.2% in December – up by 0.7% on the year;
• Retail sales volumes excluding motor trades were at their highest level of any month in 2011.

Strong recovery in sales in Q4 following weak Q3 data

• The quarterly growth rate for Q4 was 2.3%. This followed a contraction of 1.1% in Q3;
• The provisional growth rate for 2011 is a 0.9% decline in volumes on 2010;
• This 2011 out-turn is in line with our most recent forecast of a 3% decline in consumer spending for the year.
• The prospects for the retail sector remain challenging with high unemployment and the VAT increase weighing down on consumer spending. We forecast a further contraction of 1.7% in consumer spending in 2012.

While welcoming encouraging retail figures for December from the CSO, Retail Excellence Ireland, Ireland’s largest retail industry group, warned that 2012 would be another very challenging year for retailers.

David Fitzsimons, REI CEO said: “After suffering 45 consecutive months of retail sales decline, December’s like for like sales increase is undoubtedly welcome. However it must be remembered that retail sales in December 2010 were particularly weak as a result of the severe weather.”

“2012 looks set to be as challenging as recent years have been for retailers. Consumer confidence remains at record lows. The effects of the 2% rise in VAT will act as a weight around the neck of the industry in 2012. As a result, large numbers of indigenous and international retailers will continue to close their stores each week and large scale retail industry job losses will continue. Over 50,000 retail employees have lost their jobs since 2008.”

“If the Government and local authorities are serious about protecting the remaining 250,000 retail jobs, they need to take meaningful action, starting with commercial rates. While some reductions have been passed on to retailers by local authorities, reductions of 1-2% are simply not good enough considering the massive increases in rates over the last decade and the 30% drop in retail sales over the same period.”

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