Singapore’s retail sales experienced a 1.0% month-on-month seasonally adjusted decline in August, according to UOB Global Economics and Markets Research. This drop comes despite a significant recovery in tourist arrivals, which were approximately 29% higher than in the second quarter, driven by summer holidays in China and Europe. The subdued retail performance suggests restrained spending by both tourists and locals.
The decline in August was particularly evident in supermarket sales, which fell by 2.6% following a 3.7% increase in July. This decrease is attributed to the diminishing effect of CDC vouchers distributed in June. Additionally, sectors sensitive to tourism, such as department stores and watches and jewellery, also saw declines of 1.5% and 7.8% respectively. Motor vehicle sales plummeted by 9.5%, a drop more severe than anticipated given the modest changes in Certificate of Entitlement (COE) premiums and quotas.
Conversely, some segments showed recovery from July’s weakness. Cosmetics, toiletries, and medical goods rose by 8.4%, whilst computer and telecommunications equipment increased by 3.1%. Food and alcohol sales also saw a 3.4% uptick.
In volume terms, retail sales contracted by 1.2% month-on-month, with a year-on-year decline of 2.7%. The slight year-on-year nominal sales increase of 0.7% was largely due to price effects from rising input and energy costs, exacerbated by the Middle East conflict earlier in the year. UOB’s Labour Market Pressure Index indicates increased labour market slack, with redundancies rising to 4,620 in the second quarter, potentially dampening consumer confidence and discretionary spending.
