Singapore’s retail sales continued to slide in July – the first full month that in-store shopping and dining in at restaurants were permitted after their shutdown during the “circuit breaker” in the second quarter.

The total retail sales value was down 8.5% year-on-year in July, making this the metric’s fifth straight month of decline. Still, this is an improvement from the 27.8% contraction registered in June, data released by the Department of Statistics (Singstat) on September 4 revealed.

July’s decline also beat the 15% plummet estimated by private-sector economists in a Bloomberg poll.

“This is the smallest contraction since February and is higher than all but two of analyst expectations on the Bloomberg poll,” observes Howie Lee, an economist at OCBC Bank.

Bright spots were seen in spending at supermarkets and hypermarkets (28.6%), computer and telecommunications equipment (27.4%) and furniture and household equipment (9.6%). Singstat attributes this to the continued demand for groceries, technological products and household supplies as most consumers continued working from home.

Similarly, higher demand for mini-marts and convenience store (3.8%) and recreational goods (1.6%) saw takings reverse into expansionary territory in July.

Other consumer sectors remained in the doldrums, with spending declining on food and alcohol (-42.9%), department stores (-32.1%), wearing apparel and footwear (-27.7%) and watches and jewellery (-21.0%).

This follows the low tourist arrivals as international travel grounded to a halt to curb the spread of Covid-19 infections, Singstat details.

Other industries that registered contractions include petrol service stations (-24.1%) and optical goods and books (-20.4%).

Meanwhile, motor vehicle sales narrowed to a 12.8% year-on-year decline as motor vehicle dealerships and showrooms benefitted from a full month of operations.

To this end, the drop in the retail sales index eased to 7.7% year-on-year, excluding motor vehicle sales.

On a seasonally adjusted month-on-month basis, the index surged 27.9%, or 19.5% when motor vehicles were left out.

Total sales value for July came in at $3.3 billion, of which 11% came from purchases made online, Singstat shares.

A substantial portion – 49.1% - of these were of computer and telecommunications equipment. This comes as people sourced for IT and teleconferencing gadgets to support their work-from-home arrangements.

Furniture and household equipment logged the next highest digital sales of 21.8%, as consumers became self-sufficient as they stayed home.

Meanwhile, the food and beverage services index – a separate metric – saw takings contract 25.4% year-on-year in June to $665 million.

The slide in receipts were seen across the board, although food caterers were the hardest hit with turnover dropping 45.2% from the year before. This is despite the higher demand for catered meals at migrant worker dormitories.

Takings of other food services such as restaurants and fast food joints similarly dropped 29.9% and 11.5% respectively.

On a seasonally adjusted month-on-month basis, the metric was up 29.2%, presumably higher patronage brought from dining in.

“We maintain our view for Singapore’s retail sector to recover, albeit slowly given the absence
of international tourism demand,” says United Overseas Bank (UOB) economist Barnabas Gan on July’s data.

“Barring a re-introduction of social-distancing measures, the return of domestic consumer demand should also cushion the rate of contraction on a year-on-year perspective for the rest of 2020,” he notes.

Agreeing, OCBC’s Lee expects full-year retail sales to remain at -9.5% year-on-year. “We expect the improvement from June to persist into 2H20, although the snapback from the initial pent-up demand is expected to taper as we head deeper into 2020,” he points out.