Davy Research |
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Irish economy
Retail sales down 0.7% in June and 1.1% in Q2 overall
30 July 2012
David McNamara
Retail sales fell 0.7% in June and 5.5% on the year. Excluding the volatile motor trades sector, sales volumes fell by 1.5% on the month and 1.7% on the year following a 1.3% rise in May which was revised up from a first estimate of 0.8%. Sales volumes fell by 1.1% in Q2 overall and by 3.3% on the year.
As mentioned previously, Ireland's participation in the European Championship had the potential to temporarily boost sales in June. This was borne out in sharp monthly increases in bar sales (2.1%) and electrical goods (2.9%). But growth in these sectors failed to mask the underlying weakness of retail sales. Food, Beverages and Tobacco (-9.7%) and Hardware Sales (-4.9%) experienced the largest declines on the month. Excluding motor trades and bars, overall sales volumes fell 2.3% on the month.
The quarterly institutional sector account on July 26th indicated a rise in the household savings ratio to 14.2% in Q1 2012 compared to 11.2% in Q1 2011. This trend, allied to weak pay and employment growth, will weigh on consumption despite declining inflation providing some relief to households. We expect consumption to fall by 1.7% in 2012, and the latest data reinforce that view.