Car sales drive 7.9% retailing increase

There is life in the Irish consumer yet according to the latest CSO retail sales figures which recorded a 7.9% jump in sales volume for the first three months of the year compared with the same period last year.

While the figures show an overall increase, a closer analysis reveals a worrying month-on-month decline when car sales are removed, leaving the core consumer spend stagnant.

Goodbody analyst Juliet Tennent said retailers are being forced to offer deals in order to entice consumers into spending.

“On a month-on-month basis, core retail sales volumes fell 1.1%, the third consecutive fall and are flat on Q4 2013, indicating that following a strong close to 2013, momentum stalled in Q1. Discounting also continues to feature strongly with the value of core retail sales down 0.1% year on year, highlighting the difficult environment retailers are faced with.”

The figures tell two stories, with the fall in core sales indicating that some consumers are struggling, while a 31% jump in car sales, an 18.4% increase in household furniture and a 7.2% bump in electrical goods indicate that another group are feeling more confident.

“The strong growth in car sales is undoubtedly a reflection of a renewed confidence in a certain cohort of Irish households.

“An improvement in consumer confidence since the troika exit is another indicator that suggests that spending will grow this year (1.3% expected). However, despite the positive trends in the labour market, a recovery in Irish consumer spending cannot yet be described as broadly entrenched, with core retail spending falling for the third consecutive month in March,” said Ms Tennent.

While the pick-up in sales is positive, Davy analyst David McNamara warned against reading too much into it. Volatility in the figures had resulted in people raising expectations for sales last year only for the figures to disappoint.

“Overall, the recovery in retail sales bodes well for consumer spending when the Q1 national accounts are released, although we cannot be sure of a rise in consumption given volatility of the recent data.”