Singapore’s retail sales fell more than economists expected in May as a decline in automobile purchases countered higher expenditure at department and furniture stores.

The retail sales index fell 3.4% in May from a year earlier, after declining a revised 2.3% in April, the Statistics Department said today. The median estimate of seven economists surveyed by Bloomberg News was for a 2.4% drop. Excluding motor vehicles, retail sales rose 7.8%.

 

Singapore controls pollution and congestion on its roads by selling limited permits for each category of vehicles, and the island has cut the number of licenses this year. Retail sales excluding automobiles may continue to rise in coming months as an expanding workforce and record tourist arrivals spur spending at retailers such as FJ Benjamin Holdings.

 

The lower car sales don’t “represent actual underlying demand that we are seeing as a result of tourist arrivals rising quite sharply,” Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc., said before the report. “We can expect retail sales excluding cars to be stronger in the second half because the tourism outlook is very positive and we are seeing a fairly tight labor market.”

 

Adjusted for seasonal factors, retail sales declined 0.9% from April, today’s report showed.