Irish retail sales rise as European outlook darkens

Irish retail sales remained impressively strong amid a darkening European outlook last month with annual growth surging 11% in February.

Even without the considerable contribution of the motoring sector, growth rose by just over 7% year-on-year.

Despite monthly fluctuations, the retail landscape is undoubtedly improving, according to Merrion Stockbrokers chief economist Alan McQuaid.

“The latest official sales data from the CSO were again on the strong side… Although retail sales remain erratic on a monthly basis, the underlying trend is positive.

"While most attention was on cars last year and will be again in 2016, personal spending in other areas is picking up too and is becoming more broad-based.

"This can only be good news for retailers and employment prospects in the sector.

“Consumer confidence has been on the up over the last 12 months, hitting a 15-year high in January, and this has been reflected in stronger retail spending, boosted by increased disposable income through tax cuts and improved employment conditions.

"Low interest rates and falling prices have also encouraged consumers to spend rather than save, with personal consumption having its best year in 2015 since the financial crisis,” said Mr McQuaid.

Books, newspapers and stationary (+7.8%) saw the biggest monthly increase while bars (-2.8%) and electrical goods (-2.4%) experienced the largest declines.

The Irish Small and Medium Enterprises Association (Isme) welcomed the retail sector’s pick-up but urged the next government to put a far greater emphasis on facilitating an increase in e-commerce.

“We remain positive about the future of the sector, growth is returning slowly after a prolonged period of falling sales and margin wipe-out.

"It is now time for policy makers to work with sector representatives to decide the future of retailing.

“This involves investment in education and e-commerce supports for retailers entering the online sales channel as well as ensuring adequate broadband throughout the country,” said Isme chief executive Mark Fielding.

While growth was seen in the Irish retail sector last month, the wider economic backdrop is darkening across Europe.

The European Commission’s monthly economic confidence monitor yesterday showed sentiment waning across the continent to a 13-month low after a third successive decline.

The commission’s data showed the largest dips were recorded in the construction and services sectors as well as among consumers.

Separately but on a similar note, rating agency Standard and Poor’s (S&P) cut its eurozone growth forecasts adding further woe to European leaders’ plight.

The agency pointed towards a “nosedive” in financial conditions since the turn of the year as it shaved 0.3% off its growth forecast. It now expects the 19-country bloc to grow by 1.5% this year.

S&P chief European economist Jean-Michel Six also warned that action taken by the European Central Bank lately is having a dwindling impact as it tries to reboot the EU economy.

“A nosedive in financial conditions at the start of the year has taken some wind out of the eurozone economy.

"In addition, we stress that central bank actions are having a diminishing impact on inflation and growth prospects,” said Mr Six.


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