Retail sales rise 1.1% in August

Retail sales rose by 1.1 per cent from July to August and were up 1.3 per cent on an annual basis, according to new figures from the Central Statistics Office (CSO).

The latest data shows that when motor trade sales are excluded, the volume of retail sales rose by 0.2 per cent in August but was down 1.4 per cent when compared with the same month a year earlier.

In August there were notable month-on-month volume increases in motor trade sales, which were up 5.5 per cent, department store sales, up 4.6 per cent and in pharmaceuticals medical and cosmetics sales, which rose 3.2 per cent.

During the month, declines were recorded in non-specialised stores sales, which were down 0.5 per cent and in sales of clothing, footwear and textiles, which felly by 0.1 per cent.

On an annual basis, significant increases in sales volumes were recorded in six categories, including motors, which were up 20.4 per cent, non-specialised stores, up 1.3 per cent and clothing and footwear, up 1.4 per cent.

In the 12-month period under review, there were declines in sales volumes in seven categories including furniture and lighting, which was down 10.4 per cent and bars, down 10.3 per cent.

The value of retail sales rose by 1.3 per cent from July to August 2010 but was down 1.7 per cent on an annual basis. However, if motor trade sales are excluded, there was an an annual decrease of 3.6 per cent in the value of retail sales and no change in the month-on-month value.

According to the data, only motor trades and fuel showed year-on-year value increases in August while all other categories showed annual declines in values.

Among the biggest annual sales declines recorded were in bars, which were down 12.7 per cent and clothing, footwear and textiles, down 6.5 per cent.

Bloxham's chief economist Alan McQuaid said it remained to see whether the retail sales rebound could be sustained but stressed that spending will likely remain subdued until the labour market stabilises.

"Looking at the overall picture, we think spending behaviour is likely to remain somewhat restrained over the coming months, with tighter conditions for consumer credit and higher interest rates leading households to pay down debt," he said.

"Implementing further tough fiscal austerity measures in the December Budget will in our opinion only do more harm than good to the economy in 2011, particularly if personal taxes are raised again, and if there isn’t another stimulus package for consumers to replace the car scrappage scheme," he added.

Ulster Bank economist Lynsey Clemenger said the outlook for total retail sales in the third quarter was poor.

"While we welcome the better tone to the August retail sales data, this follows a clear trend of renewed weakness in the preceding months. Indeed, given that overall consumer spending failed to record a quarterly rise in the second quarter, the annual average decline in 2010 is set to be greater than the 0.1 per cent we previously forecast," she said.

"As we look ahead to next year, the lack of any notable improvement in the labour market situation will limit the extent of the recovery in consumer spending. Indeed, the possibility of further tax increases in future budgets is an additional factor that could work to constrain consumer’s willingness/ability to spend," she added.

Elsewhere, Retail Excellence Ireland said the latest figures signalled a poor end to the summer period in advance of what it said would be a difficult trading period in the run up to the budget.

"When we strip away motor sales – which have been artificially propping up the this year’s retail sales figures - the third consecutive year-on-year decline for August is bitterly disappointing. Even summer sales seem to have had little effect,” said the organisation's chief executive David Fitzsimons.

“The Irish people know there is another harsh budget looming and this will be reflected in their cautious approach to spending over the next couple of months. In shaping the next budget, the real challenge for this Government will be finding a way to implement cuts while at the same time stimulating consumer spending in order to prevent an economic standstill," he added.