Consumers buy less as troubled markets take toll

Growth in consumer spending remained subdued during May, according to the latest data on retail sales to be released by the Central Statistics Office (CSO).

The figures show that the value of retail sales rose by 3.7 per cent on the same month of 2001, compared with a 2.8 per cent annual increase for April, and a 3.5 per cent rise for March.

On a three-month basis - which offers a more reliable indication of underlying trends - the value of sales between March and May was down 2.1 per cent on the levels seen between February and April.

Volumes were also sluggish, growing by a mere 0.3 per cent between May this year and the same month of 2001. In the first five months of the year, the volume of retail sales rose by just 1 per cent.

Economists agreed yesterday that the numbers illustrated a prevailing mood of caution among consumers and pointed to continuing uncertainty about employment as a central reason for this.

"Until you see a stabilising of the employment situation, retail sales will be weak," said Mr Alan McQuaid, chief economist with Bloxham Stockbrokers.

Mr McQuaid suggested that the Government-sponsored special savings incentive scheme, which closed to new accounts in April, may also have removed a significant volume of consumer spending from the economy.

Mr Jim Power, chief economist with Friends First, described May retail spending as "subdued", adding that the "dramatic weakness" of international equity markets may be undermining consumer confidence about the domestic economic outlook.

Exports to non-EU countries grew strongly in May after a slow start to the year, according to the latest CSO release.

The seasonally adjusted figures show that companies in the Republic exported goods worth €3,487 million outside the EU over the month, compared with €2,554 million in April, a figure described by the CSO as "relatively low".

The volume of exports also rose in May, increasing by 35.9 per cent on April levels, with a 68 per cent rise in the value of organic chemical exports the main driver behind the performance.

Imports, meanwhile, fell to €1.679 billion, down from €1.724 billion in April.

Mr David Croughan, chief economist with the employers' lobby IBEC, said the trade numbers displayed "a significant pick-up" after a "sluggish" first four months.