A further fall in retail sales is expected during 2012, despite latest figures showing a healthy pick-up in consumer spending in December.
According to the CSO, retail sales volumes grew by 2.1% last month, when compared to November, and were up by 3% when measured on a year-on-year basis. Healthy spending increases were evident across department stores, bars and pubs and in the motor trade; but much of this activity had been expected due to the festive season and consumers bringing forward some bigger buys ahead of this month’s VAT increase. The monthly rise was ahead of analyst expectations and the annual increase was the biggest since last January.
On a value basis, sales rose by 2.9% on a month-by- month basis and increased by 3.4% on an annualised basis. The CSO figures follow on from statistics issued by Retail Excellence Ireland earlier this week — which showed a rise in December, but a 1.58% annualised drop for the fourth quarter of 2011, as a whole. Certainly, commentators greeted yesterday’s figures with lukewarm enthusiasm.
Chief economist with Goodbody Stockbrokers, Dermot O’Leary, said: "Given the difficulty in comparing annual trends, comparing changes over a two-year period may be more appropriate — stripping out abnormal weather trends. On this basis, core sales volumes were down by 1.7% in December 2011 relative to December 2009, indicating that the retail environment still remains quite depressed, albeit the rate of decline is slower than witnessed earlier in 2011."
Small firms lobby group, Isme noted that December’s good figures should not mask "the dreadful business environment" facing retailers, warning that many shop owners are facing "Armageddon".
"The indications are that the situation is going to remain bleak, with no sign of improvement. It is no exaggeration to state that the retail sector is facing an Armageddon-type situation unless serious action is taken to address business concerns, including the cost of rates, wages, rents and energy, which continue to suffocate the sector," Isme chief, Mark Fielding said.
David McNamara of Davy Stockbrokers said the prospects for the retail sector remain challenging, with high unemployment and the VAT increase weighing on consumer spending.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Saturday, January 28, 2012
