Retails sales figures published yesterday show that shell-shocked retailers are beginning to see signs of increased consumer spending, analysts say.
However, small business group Isme has called on Finance Minister Michael Noonan to cut employers’ tax in the budget next month to help retailers hire more staff.
Isme said that the cumulative impact of tax rises and the looming increase in the minimum wage has shredded margins and small retailers are reluctant to hire as a result.
“The Government has an opportunity in the budget to address the wage costs by at least introducing a reduced employer’s PRSI rate for the lower paid who will benefit from a statutory minimum wage increase, without any increase in productivity,” said Isme chief executive Mark Fielding.
While retail sales volumes are rising, margins remain under pressure, he said.
Analysts said that the underlying retail sales figures, which exclude timing distortions for car sales, show a broad-based recovery was under way.
The CSO figures showed that the volume of retail sales when price effects are stripped out fell 4% in August from July, but surged 9.3% in the year.
Excluding car sales, retail sale volumes rose 0.9% in the month and climbed 7.6% in the year. By value, overall retail sales fell 1.7% in the month, but were up 5.6% in the year.
The CSO data also shows that the overall volume of retail sales was now almost back to 2005 levels, but in value terms remained below the levels of 10 years ago.
“The breadth of the recovery in consumer spending is reflected in the fact that all 13 segments of the retail sector recorded annual growth in the volume of sales in August, while 11 posted annual growth in value terms,” said Investec Ireland chief economist Philip O’Sullivan.
“Consumer confidence recently improved to its highest level since 2006, so it is no surprise that discretionary sectors are leading the way — in volume terms the strongest annual improvements were recorded by mainly discretionary items, furniture and lighting, motor trades, clothing, footwear and textiles,and electrical goods.”
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