SINGAPORE (Oct 13): Singapore’s retail sales have contracted for the seventh consecutive month, falling 4.1% year-on-year in August, according to the Department of Statistics (DOS).

For the first eight months of 2019, retail sales have shrank 2.6% y-o-y.

“The fall in retail sales was largely concentrated in big ticket items, suggesting sustained cautious behaviour in consumer expenditure given the economic slowdown,” says Barnabas Gan, an economist with UOB Group.

Overall, the decline in retail sales has been driven by a 20.3% y-o-y drop in motor vehicles, as consumers put the brakes on car purchases amid the cautious economic outlook. Excluding motor vehicles, August’s retail sales figure would have fallen by a more modest rate of 1.0% y-o-y.

“Notably, a decline in motor vehicle sales has been seen in eight months out of the last eleven months,” Gan says.

Meanwhile, furniture & household equipment as well as watches & jewellery also contributed significantly to the decline in overall retail sales.

Retail sales for furniture & household equipment fell 9.8% y-o-y, marking its seventh straight month of decline, while retail sales for watches & jewellery retreated 8.6% y-o-y.

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“August’s decline in retail sales growth could also suggest that tourist receipts in the nine months of 2019 may likely stay benign,” Gan adds. “Tourist receipts data however remains rather laggard, and has registered a contraction of 4.8% to S$6.5 billion in the first quarter of 2019.”

According to recent data released by the Singapore Tourism Board (STB), visitor arrivals for the first eight months of 2019 have climbed 1.9% y-o-y to 12.6 million.

In August alone, visitor arrivals climbed 3.1% y-o-y to hit 1.73 million. The influx was mainly attributed to the longer holidays in the month, as well as the unrest in Hong Kong, which is said to have diverted tourists here.

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But Gan says the data suggests the uptick in arrivals may not necessarily translate into higher tourism spending.

“Given the disappointing August’s retail sales print as well as the overall economic slowdown seen to-date, we keep our retail sales growth outlook to average -2.0% y-o-y in 2019,” he says.

Gan adds that analysts will also be keeping a close eye on the upcoming flash GDP report and MAS Monetary Policy Committee (MPC) meeting on Oct 14.

“[These] will likely give further colour on Singapore’s economic environment,” he says.