Volume of retail sales up 7.2% in December

The volume of retail sales was up 7.2 per cent in December compared with the same period the year before, according to the latest figures from the Central Statistics Office.

Seasonally adjusted, the volume of retail sales was down 0.1 per cent in the month, with an annual increase of 7.2 per cent. If motor trades are excluded, there was a decrease of 1 per cent in the volume of retail sales in December 2017 when compared with the month before and an increase of 7.6 per cent in the annual figure.

The sectors with the largest monthly volume decreases were electrical goods (-17.9 per cent), department stores (-4 per cent) and other retail sales (-2.9 per cent).

The sectors with the largest month-on-month volume increases were furniture and lighting (3.1 per cent) and books, newspapers and stationery (3.1 per cent).

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There was a decrease of 0.5 per cent in the value of retail sales when compared with the previous month, and there was an annual increase of 4.5 per cent when compared with the year before.

When motor trades are excluded, there was a decrease of 1 per cent on the month and an increase of 4.6 per cent in the annual figure.

Erratic

Alan McQuaid, an economist with Merrion Stockbrokers, said retail sales “remain erratic” on a monthly basis, and were “still swinging back and forth”.

“Some of the biggest gainers in November turned into the biggest losers in December. Still, the underlying trend is positive.

“While most attention has been on new car sales in the past couple of years, which were lower in 2017 than 2016, personal spending in other areas has picked up over the same period, and is becoming more broad-based.”

Mr McQuaid said he expected headline sales to grow 3-4 per cent this year, with “core” sales rising 5-6 per cent.

In a note an analyst with Davy said the key driver of the consumer recovery has been employment.

“The fall in the unemployment rate to 6.2 per cent in December indicates that jobs growth remains strong. In addition, wages are rising and the income tax cuts in Budget 2018 will boost disposable incomes by close to 0.5 per cent at the average wage.

“Looking ahead to 2018, we expect that consumer spending will rise by close to 3 per cent, with retail sales volumes likely to see another year of growth exceeding 5 per cent.”

Separately, Retail Excellence deputy chief executive Lorraine Higgins said the trends indicated "a degree of vulnerability continues to exist".

“While figures might be up marginally this has occurred at the expense of intensive marketing campaigns undertaken by retailers and consequentially reduced margins,” she said.

“The fourth quarter of 2017 proved a challenging quarter with a very poor October in particular. This is undoubtedly attributable to a combination of factors to include a dip in consumer sentiment which usually accompanies budget announcements and spending being postponed until Black Friday.

Packages

“Jewellery endured a very poor quarter due to the migration of demand to international markets either online or as a result of consumers buying abroad on leisure trips.

“The less than fulsome inspection of packages in sorting offices and the need for more stringent customs controls at airports is leading to significant erosion of spending at home and billions in lost taxes to the State.”

Overall, she said, the recovery in the sector was “marginal”, and called for legislation to curb the influx of cheap imports.

“The industry continues to be threatened by the influx of cheap imports coming from non-EU websites and the failure to intercept every parcel coming in to Ireland from outside the EU. And the consequential application of customs and VAT on such goods is a missed opportunity for the exchequer. Retail-focused policies and legislation must be implemented to curtail this.”