Healthy rise in sales but no return to boom

Retail sales rose strongly in the first quarter but the sales uplift still appears to be far from indicating a return to a boom-time spending spree.

The latest CSO figures suggest sales of clothing, furnishings and lighting, pharmacies, and supermarkets tapped large increases in retail spending in the first three months of the year from a year earlier.

However, other retail businesses including electrical goods appear to have been boosted by steep discounting, while bar sales were slightly lower in the same period.

Sales in motor trades fell slightly, measured in terms of both volume and the value of the sales. Furnishing and lighting sales climbed almost 21% in terms of volume and were up by over 15% in value terms from a year earlier.

Clothing sales were also up strongly, advancing 8% in volume terms and by 6.5% in value in the three months. In March, overall retail sales rose 4.9% in volume terms and by 4.5% in value terms from March 2018.

UCC economist Seamus Coffey, who also heads up the Irish Fiscal Advisory Council, said there was “solid growth” in sales.

He said in a tweet:

Annual growth in core volumes surged to 8% but this is somewhat flattered by a dip in March 2018. Underlying growth in volume is probably around 5% to 6% which is a good clip

KBC chief economist Austin Hughes said the rise was in line with growth in incomes but that price discounting had also played its part.

“These data are very healthy but they certainly don’t suggest any major spending splurge when account is taken of both increased incomes and increased numbers of consumers in Ireland,” he said, adding that price-conscious Irish households were responding to “competitive pressures within Irish retailing”.

Meanwhile, a new economic activity tracker by the S&P economists suggests the fortunes of the eurozone are picking up. It projects eurozone GDP grew by at least 0.25% in the first quarter, as “temporary” effects wane.

“The car industry has seen car production and registrations rebound since last year. Protests in France are now having a much more limited impact on consumer spending, as the consumer confidence rebound in France over the past three months indicates,” said S&P.

Nonetheless, economic confidence in the eurozone dropped for a 10th month in April to the lowest in more than two years, according to the European Commission’s monthly survey. It showed an industrial morass is increasingly entrenched as companies continue to struggle with the global slowdown and homegrown difficulties.

The headline index, which assesses the mood of households and businesses, fell sharply to its lowest level since September 2016. Confidence in industry was particularly weak as managers become pessimistic about production expectations, order books and stocks.

In Germany, the reading hit its lowest level in three years. The eurozone’s persistent weakness — even as the US recorded strong growth in the first quarter — is becoming a major challenge for policymakers.

The ECB has already stretched out its stimulus efforts and is hoping for a marked improvement later in the year to avoid another rethink.

Additional reporting Bloomberg