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News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM


Irish retail sales volume fell in November 2007
By Finfacts Team
Jan 23, 2008 - 4:13:09 PM

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The CSO reported today that the volume of Irish retail sales in November fell because of slower motor sales.

The volume of retail sales fell by 0.6% compared with October, giving an annual rate of growth of 3.9%. Both figures were the weakest recorded so far in 2007.

But the monthly fall would have been only 0.1% if a 4.4% slump in motor sales had been stripped out. The motor sales category includes sales at petrol stations as well as cars.

A breakdown also showed a 5.3% slump in bar sales compared with the previous month.

The CSO figures are seasonally adjusted.

 

Pat MCArdle Chief Economist of Ulster Bank commented:

In late 2006, retail sales boomed, driven in no small measure, by the motor trade which had a very strong final quarter. Clothing and footwear sales were also very buoyant in late 2006. There is little doubt but that the release of SSIA savings had a positive impact on consumer spending. However, this impact was modest by reference to the size of the total savings involved and unusual in its timing – it materialised in late 2006, i.e. well before the bulk of the savings matured.

In 2007 we are seeing an opposite effect. Retail sales in October and November, but especially in November, were quite weak. This weaker performance is unsurprising given the absence of any SSIA stimulus and the deterioration in consumer confidence that has occurred in the meantime. Total sales were down 0.6% in November bringing the annual rate of change down from 4.9% in Oct to 3.9% in Nov.

The motor trade was again a big factor. It has a high weighting in total spending and sales were very weak in November. The large 4.4% month-on-month drop brought the annual rate into negative territory for the first time since Sep 2006.This also reflects a growing trend for car purchases to be concentrated in the first quarter. Sales excluding motors were stronger – down 0.1% in the month leaving the annual rate at 5.5% in volume or price-adjusted terms.

The other main source of weakness was the residual, other, category – see table below. This includes home heating oil, mobile phones, sports clothing, toys and jewellery, all of which would normally be expected to do well in the run up to Christmas. However, November saw a surprising 4.1% fall in the month.

Following an improved performance in the last few months, bars again performed poorly, declining by 5.3%, as did clothing and footwear, down a lesser 1.6% in the month. Note, however, that the annual rate of increase in the latter at 6.3% remained impressive relative to the majority of other categories, albeit that this reflects strong growth in late 2006 rather than activity this year.

Some of the weaknesses outlined above was offset by continued buoyancy in food sales - a category which accounts for more than a third of spending - and which increased by 1.2% m/m and 5.4% y/y. Household equipment was also relatively strong, growing by 4.6% m/m and 6% y/y. Having been quite strong earlier in the year, it had weakened considerably prior to the latest bounce.

Cumulative sales for the eleven months to November were up 6.6%, both headline and core, i.e. excluding motors. Continued weakness in December is likely to pull this figure back below the 6.5% we had earlier forecast for the year. However, the outcome is unlikely to be below the 2006 figure of 6.2%. Looking forward, our 2008 forecast is currently 3%.

 

Retail sector growth slowing, but 2007 was exceptionally strong year - IBEC

Commenting on the CSO retail sales figures for November, IBEC Senior Economist Fergal O’Brien said: "There is no doubt that the rate of growth in retail sales has slowed significantly in recent months, but this has been off an exceptionally strong base over the past 18 months or so. Overall, we expect the retail sector to record in excess of 6% growth for 2007 and last year is likely to have been the best year for the sector since 2000. The volume of retail sales grew by 6.6% in the first 11 months of the year."

"Most parts of the retail sector performed strongly during 2007, with both the clothing and footwear sectors recording exceptional growth of about 14%. Despite the significant slowdown in housing, sales of related goods such as furniture, electrical and DIY goods were all up by 8%-9% during the year, although their performance did weaken in the second half of the year.

Retail sales growth of 3.9% in the month of November represents a significant slowing from the high of 10% at the peak of the SSIA impact in May. Sales, excluding cars, provide a less volatile picture, however, and growth of 5.5% in November was just marginally down on the October figure. On a three month moving average basis retail sales excluding cars are growing at 6% and this suggests that the sector has entered 2008 in a relatively health state."


© Copyright 2009 by Finfacts.com

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