Struggling retail sector boosted by surge in pre-Christmas sales

PRE-CHRISTMAS sales helped boost retail sales in December and the initial outlook for 2008 looks reasonably well, despite a slowdown in economic growth.

Retail-sales adjusted for seasonal swings, increased 4.7% from a year earlier, compared with a 3.9% gain in November, the Central Statistics Office said.

Sales rose 1.7% on the month, the biggest increase since October 2006.

Government forecasts that consumer spending may rise 3.8% this year, compared with 6.6% in 2007.

Ulster Bank chief economist Pat McArdle points out that in late 2006, retail sales boomed, driven by the motor trade which had a strong final quarter.

“Something similar happened in 2007. The result is that the monthly data look strong but the annual percentage change has fallen back considerably. In December, retail sales volumes rose 1.7% and the increase over the previous December was 4.7%.

“As the monthly data are erratic, it is better to focus on the final quarter —– this was up 0.5% on the previous year, the corresponding increase was 1.2%. There has clearly been a cooling, not surprising against the backdrop of global events and deteriorating consumer confidence,” he said.

Mr McArdle said December was not as weak as expected, so 2008 has begun with sales holding up well.

“Up to half of the 1.8% monthly increase in December was accounted for by motor trades which showed a volume increase of 6.7% in December alone. This is inexplicable, given that SIMI figures for new car sales were particularly weak in December but part of it may reflect a correction from an unusually large fall in November,” he noted.

Publicans saw a 4.6% rise in December.

IBEC chief economist David Croughan said retail sales were very resilient in 2007.

“Clothing and footwear and electrical goods sales all recording double-digit growth. Supermarket, pharmacy, furniture and lighting and hardware, glass and paints all recorded strong increases in excess of 6%,” he added.