<a href="https://www.theedgesingapore.com/tags/singapore-retail-sales"  target="_blank">Singapore’s total retail sales</a> value declined 2.8% y-o-y to $3.4 billion in August, according to data from the Department of Statistics (SingStat) reported on Oct 5.

This marks the first y-o-y decline since January and a reversal from the 0.2% y-o-y growth recorded in July. Singstat attributes the decline in August mainly due to lower motor vehicle sales that corresponded with the lower Certificate of Entitlement (COE) quota this year. Sales of motor vehicles recorded a y-o-y decline of 17.5% in August.

Excluding motor vehicles, retail sales amounted to about $2.9 billion, staying flat compared to July.

Several industries in the retail sector recorded y-o-y declines, with optical goods & books and department stores seeing the largest declines at 9.6% and 8.5% respectively.

Conversely, sales of petrol service stations and watches & jewellery increased 23.7% and 7.9% respectively in August on a y-o-y basis, due mainly to higher petrol prices and greater demand for watches.

<hr/><i><strong>See: <a href="https://www.theedgesingapore.com/news/singapore-economy/singapore-registers-july-retail-sales-34-bil-growing-only-02-y-o-y"  target="_blank">Singapore registers July retail sales of $3.4 bil, growing only 0.2% y-o-y</a></strong></i><hr/>

On a month-on-month (m-o-m) seasonally adjusted basis, total retail sales declined 0.6% in August, compared to 0.8% growth recorded in July, while retail sales excluding motor vehicles decreased 1.2%, compared to 2.9% growth in July.

The m-o-m decline was driven by computer & telecommunications equipment and supermarkets & hypermarkets which fell 9.1% and 5.1% respectively.

In contrast, watches & jewellery, furniture & household equipment and optical goods & books industries recorded m-o-m growths in sales of between 4.9% and 6.6% during this period.

Of the $3.4 billion retail sales for August, online retail sales made up an estimated 14.1%, compared to the 13.9% recorded in July. Computer & telecommunications equipment, furniture & household equipment and supermarkets & hypermarkets industries made up 56.5%, 31.5% and 14% of the total online sales of their respective industry.

Meanwhile, Singapore’s total food and beverage sales fell 6.7% y-o-y in August to $628 million, continuing the 6% y-o-y decline recorded in July. Singstat attributes the decline to stricter dine-in restrictions this year.

Within the food & beverage services sector, turnover of restaurants fell 24.5% y-o-y in August. However, sales of fast food outlets and cafes, food courts & other eating places increased 8.7% and 3.1% respectively during this period, due to higher demand for food deliveries.

On a m-o-m seasonally adjusted basis, sales of food & beverage services fell 2.1% in August, with sales of fast food outlets, food caterers and cafes, food courts & other eating places falling between 2.5% and 4.7%. In comparison, turnover of restaurants increased 0.4% during this period.

Online sales made up an estimated 38.8% of total food and beverage sales in August, lower than the 39.7% recorded in July.

Singapore's August retail performance took analysts and economists by surprise. UOB's Barnabas Gan points out that the decline happened despite restrictions easing during the period. "Across key retail sectors, only six out of 14 clusters managed to see positive year-on-year growth, as compared to the first half of 2021 where a broad recovery (except for supermarkets and provision & sundry shops) were observed," he notes.

Gan believes retail sales performance in the coming months will depend on the recovery of Singapore’s domestic economy and the gradual reopening of its borders. While retail sales are forecasted to slow into the remaining months of 2021 as low base effects taper off and taking into account the tightened restrictions in September, Gan views that domestic retailers will likely see some support as borders reopen gradually. "Coupled with the expectations for Singapore’s GDP to expand 6.5% in 2021 amid a tighter labour market into the end of 2021, we remain cautiously optimistic for retail sales to expand 10% for the whole of 2021, against year-to-date performance growth of 14%.," he says.

Selena Ling, chief economist & head of treasury research and strategy at OCBC Bank, flags rising crude oil prices as something to look out for. Noting that August sales of petrol service stations actually continued to jump by 23.7% y-o-y, she anticipates prices may stay buoyant in the coming months given the energy crisis in Europe and China, especially with the coming winter period that could impact industrial activities and potentially translate to higher raw material and other component costs, as well as coupled with OPEC+’s latest decision to stick to its gradual output hike plan.

Similar to Gan, Ling has kept her retail sales y-o-y growth forecast for 2021 unchanged at around 9.6%, compared to the 15.3% contraction in 2020. "Note the Markit Singapore PMI continued to edge up to 53.8 in September, the highest since July 2021 and up from 52.1 in August. Given this is the 10th month of expansion, with strong output and new orders gauges, this would suggest that there is still room for some optimism ahead," she explains.

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