Analysts still optimistic on retail despite April sales slump

Sales were down 1.2% YoY in April.

The retail sector will likely remain robust for the rest of the year even after April sales turned out weaker than expected, according to analysts.

Barnabas Gan, acting group chief economist and head of market research at RHB Bank does not expect April’s weak showing to translate to a long-term trend as the sector continues to enjoy strong support from the government and the tourism industry.

Gan said they maintain a positive outlook on Singapore’s retail sales this year with the sector likely to deliver a “strong growth pillar” in the second half. 

Gan sees retail benefitting from healthy tourism arrivals given the favourable global economic backdrop as well as a robust lineup of international events in the coming months.

In addition to these events, UOB associate economist Jester Koh said in a separate note that they also see retailers enjoying some level of support domestically and externally, especially with the $1.9n enhancement to the Assurance Package (AP) unveiled in the Budget 2024 speech.

Koh highlighted the package’s goal to help lower and middle-income households cope with the rising cost of living through cash assistance. These vouchers will likely boost sales of retailers within three months from disbursement, according to Koh.

Retail sales dropped 1.2% YoY in April, posting its first yearly drop this year and the steepest slump since January 2023. MoM, sales were down 2.7% in April from that in March. 

“The dip in April’s print could be attributed to specific temporary factors, such as a sharp fall in demand due to the concert boom seen in 1Q24. Historically, retail sales have been expanding, and this was the first contraction in 2024. We think a single month’s disappointing performance does not necessarily indicate a long-term trend,” said RHB’s Gan.