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News : Irish Economy Last Updated: Jun 28, 2014 - 6:16 AM


Irish Economy 2014: Volume of retail sales ex-cars fell in May
By Finfacts Team
Jun 27, 2014 - 1:35 AM

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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 Q1 2014.

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 targets.

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 recession."

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."

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