Consumer confidence to stabilise

CONSUMER spending and confidence are expected to stabilise as the year progresses, even though retail sales nose-dived by 17.3% in January.

The latest figures from the CSO showed that December’s 0.4% fall in retail sales volumes was followed by a 17.3% dive in January, the second highest monthly fall behind the 19.5% decline measured in the first month of last year. January’s sales volumes fell by 4.8% on a year-on-year basis.

In volume terms, such items as fuel, books and hardware products were hardest hit. Bar sales were down by nearly 10% in volume terms and by just under 13% in value terms in the month.

Seasonal issues, including the timing of the January survey missing out on the selling period of the final week of the month, when car sales improved significantly, seemed to exaggerate the latest figures, however.

A 2,300-person drop in February live register figures, also published by the CSO yesterday, added to the tentative feeling of optimism. “Though labour market conditions will remain difficult throughout 2010, the worst of the job losses appears now to be behind us. This will help stabilise consumer confidence and spending,” said IBEC economist Reetta Suonpera. “The January retail sales figures are also more encouraging, but only in context of 2009, when sales in many sectors were essentially in free fall. Sales continue to decline on an annual basis, but at a slower rate than in any month last year. Though it is too early to point to a definite improving trend, a slower pace of deceleration is good news,” she added.

Patrick Koucheravy of property consultants CB Richard Ellis warned, however, that while Ireland’s unemployment levels seem to be steadying below the 13% level, the issue of long-term unemployment, especially among young males, remains serious and “will continue to exert a drag on any modest recovery we see in 2010“.

Meanwhile, the IBEC-affiliated representative body Retail Ireland said the latest monthly retail sales figures showed how negative a trading environment faces Irish retailers. It used the figures as a springboard to reiterate calls for the Government to address cost problems, particularly by extending the ban on upward only rent increases from just new leases to existing leases.

“A major problem for retailers is that Ireland is a very expensive place to do business. Only when we bring down our costs to those of other European countries will we avoid the current regrettable situation where retailers are forced to close shops and reduce staffing levels.

“Rents in particular have not been reduced and in some cases are being increased under upward only rent review clauses,” added Retail Ireland director Torlach Denihan.