Singapore’s retail sector experienced a modest 1% month-on-month seasonally adjusted increase in May, primarily due to a surge in motor vehicle sales, according to a report by UOB Global Economics and Markets Research. Motor vehicle sales soared by 11.9% in May, a stark contrast to the 0.3% rise in April, attributed to a higher Certificate of Entitlement (COE) quota. Excluding motor vehicles, retail sales would have declined by 0.6%.
The report highlighted positive growth in several retail categories, including supermarkets and hypermarkets, which saw a 4.1% increase, and wearing apparel and footwear, which rose by 3.8%. Recreational goods and department stores also experienced gains of 3.5% and 3.3%, respectively. However, these were offset by declines in watches and jewellery, food and alcohol, and computer and telecommunications equipment.
Despite the gains in May, the year-to-date retail sales growth remains subdued at 1%, compared to 1.4% in 2024 and 2.3% in 2023. The slow recovery in tourist arrivals, which are still below pre-pandemic levels, and the diversion of resident spending abroad, influenced by the strong Singapore dollar, have been contributing factors.
Looking ahead, UOB anticipates that retail sales will remain tepid for the rest of 2025, with a cooling labour market and fewer firms intending to raise wages. However, government measures such as the disbursement of CDC and SG60 vouchers could provide some support to retail activity.
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