ANN/THE STRAITS TIMES – Singapore saw its retail sales increase in an upward trend for the third consecutive month, spurred by the excitement of Taylor Swift’s Eras Tour in March, though future sustainability of this trend is uncertain.
March saw a 2.7-per-cent increase in retail sales compared to the same month last year, a slowdown from the revised 8.6 per cent rise observed in February, as per recent data released by the Department of Statistics.
Excluding motor vehicles, retail sales saw a two per cent increase in March, a continuation of the strong 9.5 per cent rise seen in February. Sales increased in 10 out of the 14 retail sectors.
Economist from Oxford Economics Sheana Yue pointed out that March’s data reinforced signs of a rebound in the retail sector at the beginning of the year, with a 1.3-per-cent growth in the first quarter compared to a 0.3-per-cent decline in the last quarter of 2023.
She attributed this rebound primarily to an increase in tourists from mainland China, boosted by a new visa-free travel policy starting in February, and regional visitors attracted by concert events.
However, when adjusted for seasonality and on a month-to-month basis, retail sales saw a one per cent decline from February.
Yue highlighted that the improvements in March were widespread, largely fuelled by a busy music tourism agenda.
“The food and beverage sector not only maintained but also expanded its growth into double-digit percentages, alongside significant gains in discretionary goods,” she remarked.
The most notable monthly increases were in food and beverage sales, which surged by 15.1 per cent, and were followed by gains in cosmetics, toiletries, and medical goods at 8.8 per cent, and department store sales, which increased by 7.7 per cent.
In contrast, month-to-month sales experienced the sharpest declines in sectors dealing with high-value items such as computer and telecommunications equipment, which dropped by 8.5 per cent, and furniture and household equipment, down by 7.9 per cent.
UOB senior economist Alvin Liew and associate economist Jester Koh said the March data was “slightly underwhelming”, likely due to a dip in Chinese tourist arrivals.
“In addition, we saw seasonally adjusted month-on-month declines for several components that may reflect the dip in demand after the festive season and could be temporary,” added the UOB economists.
The estimated total retail sales value in March came in at SGD4.2 billion.
Of this amount, about 11.7 per cent was from online sales, higher than the 10.8 per cent in February.
Excluding motor vehicles, total retail takings were about SGD3.5 billion, of which 13.9 per cent came from online sales.
Looking ahead, Yue warned that the lift to retail sales will fade over the coming months as the 21-per-cent quarter-on-quarter jump in tourist arrivals in the first quarter is unlikely to be repeated.
“There is smaller scope for a boost now that arrivals are back to roughly 90 per cent of their 2019 levels.
What’s more, governments are starting to pare back fiscal support to rebalance their balance sheets, and with the United States Federal Reserve policy rates set to stay higher for longer, we suspect visitors from other countries as well as locals in Singapore will start to tighten their purses,” she added.
Liu thinks the initial signs of an easing in the labour market may dampen private consumption in the months ahead.
But she is optimistic that a continued tourism recovery will support growth.
