Singapore’s retail sales excluding motor vehicles rose at a slower pace in September after the economy contracted last quarter.

The index measuring purchases excluding automobiles climbed 5.3% from a year earlier, after gaining a revised 6.4% in August, the Statistics Department said today. Including vehicles, which are sold subject to government caps, total retail sales rose 0.3%, less than the median forecast for a 1.5% increase in a Bloomberg News survey of eight economists.

 

Singapore’s gross domestic product shrank at a 19.8% annual rate in the third quarter from the previous three months, the government said last month, and Prime Minister Lee Hsien Loong has said the economy may “moderate” in the coming months, citing risks from the U.S. and Europe. A stronger currency may also have deterred spending by tourists, said Citigroup Inc. economist Kit Wei Zheng.

 

“The strength of the Singapore dollar from Monetary Authority of Singapore tightening may temper retail spending by tourists,” Kit said. “The increasing confidence of residents may not necessarily translate into stronger domestic retail sales, as higher incomes and the stronger Singapore dollar have made it more attractive for residents to spend abroad rather than domestically.”

 

Retail sales excluding automobiles were boosted earlier this year as the city state added more than 85,000 jobs from January to September and the island’s services industry expanded, helped by the opening of two casino resorts run by Genting Singapore Plc and Las Vegas Sands Corp.

 

Adjusted for seasonal factors, overall retail sales fell 2.4% from August, today’s report showed.

 

Singapore controls pollution and congestion on its roads by selling limited permits for each automobile category, and the quotas may distort sales figures because motor vehicles are the biggest component of the retail index, accounting for a third of the gauge.