Irish Economy: The CSO reported Monday that the volume of retail sales (i.e. excluding price effects) decreased by 1.7%
in June 2014 when compared with May 2014 and there was an increase of 4.8% in
the annual figure. If Motor Trades are excluded, there was no change in the
volume of retail sales in June 2014 when compared with May 2014 and there was an
increase of 3.6% in the annual figure. Retain sales turner ex-cars was up 2.1%
in the 12-month period.
The sectors with the largest month on month volume increases were Other Retail
Sales (+10.4%), Hardware, Paints & Glass (+4.1%) and Pharmaceuticals, Medical &
Cosmetic Articles (+2.6%). The sectors with the largest monthly falls were
Bars (-4.4%), Furniture and Lighting (-4.1%) and Motor Trades (-3.8%).
There was an decrease of 0.3% in the value of retail sales in June 2014 when
compared with May 2014 and there was an annual increase of 3.3% when compared
with June 2013. If Motor Trades are excluded, there was a monthly increase of
0.1% in the value of retail sales and an annual increase of 2.1%.
Retail Ireland director said: "For
the month of June there were annual increases in sales in car dealerships,
supermarkets, petrol stations, clothes stores and electrical outlets. Furniture
stores saw a huge 16% rise in the value of their sales, indicating movement in
the property market. These increases were offset somewhat by falls in department
stores, specialist food stores like butchers and bakeries, and in hardware
"A pattern of sales growth in 2014 has clearly emerged. While many sectors of
retail remain in difficulty, sales overall have risen every month for the first
half of the year, with second quarter growth, excluding motor sales, of over 2%,
up from last year.
"This growth should not be taken for granted. The Government very wisely
included retail in their recently published list of priorities. We support calls
from Ibec and others to give money back to consumers through reductions in
income tax in the October budget. It is the best way to nurture growth in the
Conall Mac Coille,
chief economist at Davy, commented - - "Data released July 28th confirm that Irish retail spending bounced back
sharply in H1 2014. Sales volumes were up 6.5% in the first half of the year,
reflecting buoyant car sales (28.5%), but were still up 3.4% excluding motor
trades. The pace of the recovery in retail spending has accelerated through
2014. In the three months to June, sales excluding motor trades rose by 4.0% on
the year, the fastest pace of growth since 2007.
At face value the data show a worrying 1.8% decline on the month in June, but
this decline is artificial. Excluding motor trades, sales rose by 0.1%. The
Society of the Irish Motor Industry (SIMI) reports that July car sales have been
exceptionally buoyant – already exceeding year-to-date the full-year figures for
2013. So, retail sales will bounce back sharply in July, more than offsetting
the 1.8% decline in June.
The overall rebound in Irish retail spending in H1 is not too surprising.
Consumer confidence surged as Ireland approached the EU/IMF bailout exit, with
households indicating that they were ready to spend on big-ticket items. Nominal
wages have also stabilised, up 0.9% in 2013. In addition, the direct impact of
Budget 2014 measures on disposable incomes was smaller than in previous years.
Nonetheless, given the strength of retail sales volumes, the weakness of overall
consumer spending is all the more puzzling. According to the national accounts,
real consumer spending fell by 0.8% in 2013, and there appears to have been
little sign of any improvement in early 2014. Consumer spending fell by 0.1% in
Q1, up only 0.2% on the year. At face value, Irish GDP data suggest overall
consumer spending has lagged well behind the recovery in retail sales (Figure
However, nominal consumer spending rose by 1.1% in 2013, the fastest pace of
growth since 2008, and is up 1.8% in the year to Q1 2014. The CSO’s measure of
overall consumer prices rose by 1.9% in 2013, well above CPI inflation of just
0.5%, and suggesting that price pressures are eating into households’ real
spending power. But we suspect the 1.9% figure has been artificially distorted
upwards by measurement problems. Using an alternative index, such as the CPI,
would imply that consumer spending rose in early 2014. In any case, we expect
the strength of retail sales in H1 2014 signals that overall consumer spending
should expand by around 1.5% in calendar year 2014, the strongest rate of growth
economist at Goodbody commented: Recovery in consumer spending maintained in June
Despite a 1.7% fall in the monthly headline retail sales data in June,
underlying trends indicate that there are signs of life in Irish consumer
spending. On an annual basis, total retail sales rose 4.8% while core retail
sales volumes (ex-motor trades) were flat on a mom basis and increased 3.6% yoy.
Overall, the trend in core sales has improved in Q2 with volumes 4% yoy higher,
faster than the 2.8% yoy increase seen in Q1.
Volume increases across 10 categories:
10 out of the 13 CSO categories grew on a annual basis in June, with three
showing double digit growth (Furniture & lighting +26% yoy, Motor trades +13%
yoy and “Other” +14% yoy). In value terms, Furniture & lighting grew by a slower
16% yoy indicating that consumers were likely taking advantage of discounting,
however, the performance of this sector has been solid for the past 9 months.
Despite slowing ahead of the registration change in July, the strong performance
of motor trades, which has been a feature since the beginning of the year, also
continued. Volumes in Clothing and footwear (6.5% yoy) and Electrical goods
(+7.2% yoy) were also helped by discounting and perhaps the World Cup for the
Weakness persists in three sectors:
Of the three categories experiencing annual declines, Bars was the weakest with
volumes down 5.3% yoy. Some of this may be associated with people staying home
to watch the World Cup, which makes the 2.6% yoy fall in Food, Beverage &
Tobacco sales somewhat surprising, although this has been a persistently weak
category. As has Books, Newspapers & Stationary, which saw volumes fall 2% yoy.
Upside risks to consumption in the short term:
Despite the recent positive trends in retail sales, core volumes remain 11%
below their peak and values continue to contract on an annual basis as Irish
consumer look for good deals. That said, strong employment trends and the
positive performance in property prices are helping consumer confidence, and in
the short term, there are upside risks to our forecasts for consumption (2014
+1.3% 2015 +1.6%). However, the large debt burden carried by Irish households
will ultimately curb spending and we remain cautious in the medium term."