Growth in retail sales defies fears of Brexit impact

Retail sales grew by nearly 5 per cent in the 12 months to January, suggesting weakness in sterling is not dampening activity in the sector.

There is a fear that sterling’s depreciation may send shoppers across the Border in search of bargains, which could damage retail sales here.

The latest numbers from the Central Statistics Office (CSO) indicate retail sales roses by 2.2 per cent in January on the back of increases in the cost of electrical goods and hardware.

When volatile motor trades are excluded, there was a monthly increase of 1.5 per cent for January and 6.1 per cent year-on-year.

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The sectors with the largest monthly increases were electrical (+8.9 per cent), hardware and paints (+5.6 per cent) and department stores (+4.7 per cent).

The sector with the largest month-on-month volume decrease was pharmaceuticals, medical and cosmetic articles, which fell 2.8 per cent.

Retail sales values, excluding bars and car sales, increased by 3.3 per cent in the year to January, pointing to a strong performance over the post-Christmas January sales period.

Uncertain times

“Given the disappointing trading levels during the usually busy month of December, it is encouraging to see 2017 start so strongly in terms of activity at Irish tills,” said Retail Ireland director Thomas Burke.

“Post-holiday sales can sometimes fall flat after a busy pre-Christmas period but it would appear that the reverse is the case this year. What is most encouraging is that all retail categories outperformed the same period in 2016 and this should offer hope for the coming months.”

However, Mr Burke sounded a note of caution when assessing the hopes for the sector over the coming year.

“Retailers are operating in increasingly uncertain times and the fluctuation in performance of the sector month-on-month clearly points to growing uncertainty amongst consumers and a rapidly changing external environment,” he said.

Services sector

Separate figures for Ireland’s services sector showed the pace of new export business jumped to its highest level in nearly a year.

Investec’s latest purchasing managers’ index (PMI) for the services industry fell to 60.6 in February, though this was still well above the 50 mark that separates growth from contraction.

The report showed that customer demand remains very healthy, with the rate of growth in new business once again coming in much stronger than the series average, while the pace of expansion in new export business quickened to the fastest since July 2016.

“All in all, this week’s Investec PMI surveys indicate that while the rate of growth in activity across much of Ireland’s private sector has eased slightly from January, it remains well above the series average,” Investec economist Philip O’Sullivan said.