Thursday, September 02, 2010
FEARS that an economic recovery has stalled were expressed when figures showed retail sales fell in July.
According to the Central Statistics Office (CSO) retail sales fell 0.1% by volume on the year in July and 0.2% from June. This is the first year-on-year drop in sales since January.
In the year in volume terms department store sales were down 7.3%, clothing, footwear and textiles were down 5.7% and pharmaceutical medical and cosmetics sales fell 10.6%.
Bar sales were hit hard and were down 13.8% in the year.
Excluding motor trades, the volume of retail sales fell by 1% month-on-month in July, giving a year-on-year decrease of 2.5% as against an annual decline of 1.5% in June. By value sales were down 3.2% in the year.
Chief economist with Bloxham stockbrokers, Alan McQuaid, said the figures show personal spending is slowing down again.
"It now looks like we’re going backwards in terms of the economic performance. I think we’ve hit a wall," he said.
He added that until the labour market stabilises and consumers become more confident about job prospects, then spending will remain subdued.
Retail sales were down 14% in volume terms last year while overall spending on goods and services was 7% lower on average in real terms than in 2008.
"Looking at the overall picture, we think spending behaviour is likely to remain somewhat restrained over the coming months, with tighter conditions for consumer credit and higher interest rates leading households to pay down debt."
He said any plans from the Government to implement further tough fiscal austerity measures in the December Budget will only do more harm than good to the economy in 2011 unless there is also another stimulus package for consumers to replace the car scrappage scheme.
Retail Ireland director Torlach Denihan said the underlying trend of stabilisation and recovery in retail sales that was emerging earlier this year seems to be stalling. This underlines the fragile state of consumer spending and the retail sector generally.
According to Goodbody Stockbrokers analyst Dermot O’Leary the latest data suggests that caution on consumer spending prospects is warranted.
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