Irish Economy 2014: The volume of retail sales
(i.e. excluding price effects) increased by 0.9% in May 2014 when compared with
April 2014 and there was an increase of 6.2% in the annual figure, according to
the CSO today. If Motor Trades are excluded, there was a decrease of 0.5% in the
volume of retail sales in May 2014 when compared with April 2014 and there was
an increase of 3.4% in the annual figure.
The sectors with the largest month on month
volume increases were Motor Trades (+4.6%), Electrical Goods (+1.8%) and Other
Retail Sales (+1.4%). The sectors with the largest monthly decreases were
Furniture and Lighting (-6.9%), Books, Newspapers and Stationery (-3.9%) and
Hardware, Paints & Glass (-2.0%).
There was an increase of 0.6% in the value of
retail sales in May 2014 when compared with April 2014 and there was an annual
increase of 4.1% when compared with May 2013. If Motor Trades are excluded,
there was a monthly decrease of 0.3% in the value of retail sales and an annual
increase of 1.4%.
Irish retail sales
growth sustained into the second quarter: Conall Mac Coille, chief economist at
Davy said: "Thursday’s data suggest that the
recovery in Irish retail spending evident in early 2014 has been sustained into
the second quarter of the year. Retail sales rose by 0.9% in May and by 6.2%
year-on-year. Excluding car sales, retail spending fell by 0.5% in May; however,
following a strong 1.9% rise in April, it is still up 3.4% year-on-year.
Overall, retail spending ex-motor trades looks set to rise by around 1% in Q2
2014 – an annualised pace of 4% and a fifth consecutive quarter of expansion. If
anything, this suggests that Irish consumer spending could grow even faster than
the 1.5% growth we are currently forecasting for 2014. We will be revising our
forecasts for the Irish economy after next week’s release of Irish GDP data for
The rebound in Irish retail spending in 2014 has largely been driven by car
sales, up 20.3% year-to-date, driven by the rebound in consumer confidence as
Ireland approached the EU/IMF bailout exit. But even excluding car sales, retail
spending has expanded by 3.3% in the first five months of 2014. Indeed,
exchequer returns to May show VAT receipts up 4.4% year-on-year. So the rebound
in consumer spending is helping the Irish government to meet its deficit
At a sectoral level, the recovery in Irish retail spending is proceeding broadly
as expected. Consumer sentiment surveys have shown that Irish households are
more willing to spend on big ticket items such as motor trades (+20.3%
year-to-date) and furniture and lighting (+19.2%). Consumers had also cut back
sharply on discretionary items such as automotive fuel (+4.3%) and bars (+0.6)
during the recession, but these sectors are now rebounding. Some defensive
sectors such as food and beverages (-4.5%) and clothing and footwear (+6.5%) are
not necessarily joining in the recovery, having been less affected during the
Retail Ireland, the Ibec group that represents
the retail sector said CSO figures published for retail sales in May showed
strong growth, but this is tempered when the impact of car sales is factored out
of the data. While the value of sales rose by over 4.1%, sales excluding motor
trades and bars rose by 1.1% last month compared with May 2013. There was an
increase of 3.4% in the volume of those sales, highlighting the fact that
retailers continue to discount prices to drive footfall.
Commenting on the figures, Stephen Lynam, Retail
Ireland director, said: "Leaving car sales aside, there was
strong growth in the sale of clothing and footwear, furniture and lighting and
electrical goods. This suggests that consumers who shied away from buying
certain big ticket items are now starting to purchase them. Sales in
supermarkets and department stores also rose.
"However, there were falls the sales in specialist food stores like bakeries and
butchers, in pharmacies, in hardware outlets and in book stores. These numbers
show that many retailers are continuing to struggle.
"Growth in retail is key to ensuring that the economic recovery results in
significant job creation. The Budget in October offers the Government a chance
to put money back into the pockets of hard pressed consumers, encouraging them
to spend and giving retailers reason to start hiring new staff. It is absolutely
vital that the Minister takes that opportunity."