Dec 2007 retail sales exceed forecast, rise 2.5% to $3.15b

RETAIL sales climbed 2.5 per cent to $3.15 billion in the December 2007 festive shopping season, the Singapore Department of Statistics said yesterday.

Growth was helped by strong numbers from department stores, petrol service stations, and apparel, footwear and recreational goods sales. The December performance exceeded the median forecast of 1.8 per cent by a Bloomberg survey of 14 economists. The growth also reversed a 0.3 per cent decline in November when rising oil prices curbed vehicle sales.

After seasonal adjustment, retail sales rose 1.7 per cent from November, reversing two months of decline. But at constant prices, overall retail sales fell 2.6 per cent year-on-year. All sectors showed strong growth except for motor vehicles, which saw a 12.5 per cent drop in its third consecutive month of decline. Excluding that sector, total retail sales climbed 8.9 per cent year-on-year.

The petrol service station sector climbed 33.9 per cent from last year on the back of rising oil prices, from the 32.2 per cent gain in November. Department stores jumped 9.1 per cent, down from November's 16.2 per cent gain.

HSBC economist Prakriti Sofat said: 'The bottomline is that households are not spending on big ticket items for now, though they are continuing to spend on small to mid-ticket items,' referring to a slight gain in momentum in supermarket and sundry shop sales from November.

'This possibly reflects an increased cautiousness with regards to the future or that potential car owners are very sensitive to COE costs and petrol prices. Our underlying view remains that strong fundamentals such as robust real income growth and decade-low real interest rates should see households increase spending in the period ahead,' she said.

The catering trade, meanwhile, rose 8.3 per cent in December, building on the 6.9 per cent gain in November. Eating places such as cafes and canteens showed the strongest performance, rising 16.6 per cent. Fast-food outlets climbed 8 per cent and restaurants 3.8 per cent. Food caterers, making up 14.8 per cent of the index, was largely unchanged.

At constant prices, the overall gain moderated to 4.6 per cent year-on-year.