Muted sentiment: Pedestrians in Singapore. Analysts say retail sales are forecast to remain subdued this year. — AFP
SINGAPORE: Retail sales in Singapore fell more than expected in February, with analysts expecting negative fallout ahead from the latest US tariffs announced last week.
The impact on Singapore’s economy from the Trump administration’s sweeping tariffs could hurt consumer spending and confidence, especially if it leads to slower hiring and job losses, they said.
DBS Bank senior economist Chua Han Teng said: “Escalating global trade tensions could negatively impact Singapore’s small and open economy, potentially softening employment conditions and consumer confidence, and weigh on household spending and retail sales.”
Data from the Singapore Department of Statistics (SingStat) last Friday showed retail sales slipped 3.6% year-on-year (y-o-y) in February – partly due to the timing of Chinese New Year.
It comes after retail sales rose 4.5% in January on festive buys, reversing the 2.9% drop last December.
“The decline in retail sales was partly due to Chinese New Year being celebrated in February last year, as opposed to January this year,” SingStat said.
Still, February’s drop was much worse than the 0.2% dip forecast by analysts in a Bloomberg poll.
Excluding motor vehicles, retail sales fell by a sharper 6.7% y-o-y, reversing the 4.8% increase in January.
When the Chinese New Year effect is stripped out, retail sales in the first two months of this year edged up 0.8%, thanks to car sales.
Excluding motor vehicles, sales contracted by a smaller 0.5% in January and February compared with last year.
“The decline in total retail sales in January to February (when car sales are excluded) suggests that domestic consumption remains subdued,” said Maybank Securities Singapore economist Brian Lee.
“The spending boost from the S$300 Community Development Council vouchers given to each household in January has been short-lived.”
He added that retail sales are likely to remain subdued this year.
“Consumer demand is being diverted overseas with the strong Singapore dollar. Household sentiment could weaken amid a dimming economic outlook and broadening global trade war.
“High manpower and rental costs continue to weigh on operating margins,” said Lee.
OCBC Bank’s chief economist and head of global markets research and strategy, Selena Ling, said that US President Donald Trump’s latest round of tariffs will add to the “risk-off mood” due to the heightened uncertainties, referring to a situation where market sentiment is more cautious, and the appetite for risk is lower.
Economists said Trump’s tariffs may not necessarily lead to higher retail prices here.
Ling said that deflationary effects, or decreasing price levels, are more likely as the economies hit by the tariffs see dampened domestic demand and growth.
Maybank’s Lee said: “The net effect of Trump’s tariff war should be disinflationary, due to slowing global demand and a global glut of goods displaced by high US tariff walls.”
In February, the biggest y-o-y decline in sales was for apparel and footwear (18.4%), followed by department stores (14.6%), and supermarkets and hypermarkets (13.3%).
Takings at the till rose y-o-y for other categories such as motor vehicles (20%), optical goods and books (6.4%t), and computer and telecommunications equipment (4.3%).
Sales of food and beverage (F&B) services fell 5.6% y-o-y in February, reversing the 10.3% jump in January.
SingStat also attributed the lower F&B sales to the timing of Chinese New Year .
On a seasonally adjusted month-on-month basis, F&B sales dropped 1.4% from January, reversing from the 4.9% growth in the previous month.
The total F&B sales value came in at S$961mil in February, lower than the S$1.1bil for the prior month.
About 23.4% of the total came from online sales.
Restaurant turnover declined 10.2% y-o-y and sales from fast-food outlets fell 8.2%. Cafes, food courts and other eating places also saw turnover drop 3.1%.
In contrast, food catering revenue climbed 6.6% y-o-y. — The Straits Times/ANN
