HELPED again by a massive increase in motor vehicle sales, Singapore's retail sales rose 5.2 per cent year-on-year in July, data released by the Department of Statistics on Tuesday revealed.
But if the 40.6 per cent rise in car sales is excluded, retail sales would have gone up by a marginal 0.8 per cent - which economists say reflects Singapore's sluggish economic growth.
"This data is for July, so by right, there should have been more consumer spending pre-SG50. So given that retail sales only picked up slightly excluding car sales, the outlook could still be pretty lacklustre," Stanchart economist Jeff Ng told The Business Times.
Apart from car sales, only one other segment - watches & jewellery - experienced double-digit growth, rising 11.7 per cent year-on-year in July.
The third- and fourth-best performing areas were medical goods & toiletries (9.9 per cent) and telecommunications apparatus & computers (6.4 per cent).
The surge in motor vehicle sales helped to offset declines in other areas, such as petrol service stations (-16.4 per cent), furniture & household equipment (-5.5 per cent) and optical goods & books (-4.4 per cent).
In month-on-month terms, however, motor vehicle sales were actually a drag on overall retail sales. Sales of cars fell 23.1 per cent on a seasonally-adjusted basis.
The drastic drop in car sales resulted in a 2.2 per cent decrease in retail sales in July. Excluding motor vehicles, retail sales rose 2.6 per cent from June.
Explaining the discrepancy between the year-on-year and month-on-month performances, Mizuho economist Vishnu Varathan told BT: "The point is that the softening Certificate of Entitlement (COE) effect came into play a lot sooner than expected ... If month-on-month, your motor vehicle sales increased by 26.3 per cent in June, you kind of forgive it for declining 23.1 per cent in July (because there was) that huge jump the month before.
"But then, it also practically means that (car sales) went back to May levels - all the gains were pretty much given away."
Economists had previously flagged the unsustainable nature of car sales' out performance. Going forward, analysts do not foresee motor vehicle sales continuing to haul up overall retail sales, as favourable base effects are set to wear off.
Total retail sales value in July was estimated at S$3.5 billion - higher than July 2014's S$3.3 billion.
This article was first published on Sep 16, 2015.
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