Retail sector continues boom but bar and motor trades remain volatile

STRONG retail sales were achieved in June resulting in a good quarter outturn as well, according to the latest Central Statistics Office Analysis.

Excluding the volatile motor trade component retail sales were solid in June, continuing the upward trend in April and May.

Total retail sales (excluding motor) grew 2.8% in the year to end June.

For May and April the respective year-on-year (yoy) figures were 2.8% and 2.9% respectively.

Vehicle sales contributed to the total retail sales growth rate easing to 3.6% yoy from 4.1% yoy in June.

In its review Goodbody stockbrokers said the slowdown in motor sales was insignificant, “given the buoyancy that has been witnessed in the first few months of 2004 within this category; Motor vehicle sales remain ahead by a still impressive 6.0% yoy in volume terms in July,” said senior economist Dermot O’Leary.

The less volatile quarterly numbers also bear this out showing underlying volume growth near the 3% mark, said Eugene Kieran, head of asset allocation, Irish Life Investment Managers.

It is clear the hot sectors are clothing, footwear and furniture where a strong housing market has helped furniture sales.

In clothes, volumes are up over 10% in the past year but a very competitive pricing environment means shop tills are only ringing up an increase in sales of around 6%.

However two categories of sales stand out as negative.

Sales of electrical goods fell 6.6% while bar sales continue to suffer and were off 4.9% on an annual basis.

Consumer confidence has picked up from very low levels over the past 6 months, but is still well off the peak periods enjoyed during the boom.

Optimism on the jobs front and general budget finances are certainly helping here.

While figures still pale against the even stronger trend seen in consumer spending in powerhouse economies such as the US and Britain, the numbers are way ahead of what many of our Eurozone neighbours are seeing.

Germany, for example, is struggling to break into the 1% band.

Overall the analysts argue the improving figures also confirm the economy is well on the road to recovery.