Singapore’s retail sales expand for third straight month in November

Singapore’s retail sales grew for the third consecutive month in November. The retail sales expanded 1.1 percent year-on-year and 0.5 percent on a sequential basis, driven by motor vehicles that rose sharply by 17 percent year-on-year and 3.6 percent month-on-month. Other categories of retail sales that rebounded on-year included recreational goods that rose 1.3 percent year-on-year, medical goods that rose 4.4 percent and optical goods and books that grew 0.3 percent.

However, stripping motor vehicles, retail sales dropped 2.1 percent year-on-year and dropped 0.3 percent on a sequential basis in the month. The retail sales growth was mainly dragged by computer & telecom equipment, wearing apparel and footwear and furniture and household equipment that implied certain belt-tightening on consumer discretionary items.

Even if there were promising signs of rebound witnessed in the first half of 2016 visitor arrival and tourism numbers, there might have been certain Zika-related outbreak concerns from October that probably discouraged inbound visitors, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank. Retail sales had started 2016 on a strong note, with January recording 7.9 percent growth; however, it has averaged just 2 percent year-on-year for the first 11 months of 2016.

Given that crude oil prices and COE premiums for categories A&B are greatly staying supported above $50 per barrel and $50,000 respectively, it stays uncertain if motor vehicle sales could continue to sustain its robust uptrend, particularly given that the domestic labor market is also indicating signs of weakening.

“While 1Q17 may see the retail sale outlook enjoying the usual CNY festivity uptick, it may not sustain for the whole of 2017”, added Selena Ling.