Singapore retail sales fall sequentially in December, private consumption to remain restrained in H1 2017

Singapore’s retail sales dropped in December on a sequential basis. Excluding motor vehicles, the retail sales rose in the month. On a month-on-month basis, the retail sales declined 1.9 percent and rose 0.4 percent year-on-year. Stripping motor vehicles, Singapore’s retail sales grew 0.7 percent sequentially and 0.3 percent year-on-year.

This is a marked deceleration from November’s readings that were revised to 0 percent sequentially for total retail sales. But the December’s readings were less severe than the 4.1 percent sequential decline that was expected because of weak Christmas sales. The positive print for retail sales excluding motor vehicles for December also marked the first return to positive territory since January 2016, noted OCBC Economist.

Motor vehicles mainly weighed on the local retail scene that dropped 11.9 percent sequentially. Department stores and computer & telecommunications equipment were also a drag on the retail sales. Meanwhile, spending increased for medical goods & toiletries, watches & jewellery, recreational goods and optical goods and books.

For the whole of 2016, retail sales expanded 2.2 percent year-on-year, less than half the rate witnessed in 2015, which recorded a rise of 4.7 percent. Singapore had seen a record number of visitor arrivals at 16.4 million and also record tourism receipts at SGD 24.8 billion.

The shopping component in tourism receipts grew strongly by 48 percent year-on-year for the initial three quarters of 2016. However, it did not appear to benefit the local retail scene to the same degree. This might suggest that the domestic consumers possibly tightened their wallets and reduced private consumption.

The retail sales picture are expected to expand by a similar modest rate of about 1 percent to 3 percent year-on-year in 2017, stated Selena Ling, Head of Treasury Research & Strategy, OCBC Bank. STB anticipates visitor arrivals to grow just modestly to 16.4-16.7 million in 2017. Given the weakening domestic labor market conditions, private consumption is likely to remain restrained in the first half of 2017, added Selena Ling.