Retail sector suffers from cash-strapped shoppers

Sales dipped 2.2% in May as consumers refrained from buying luxury items.

According to OCBC, the pullback in retail sales continued in May with overall retail sales volume falling 2.2% MoM. After stripping off the heavily weighted motor vehicle component, retail sales fell by an even greater 2.9% MoM. Similarly, retail sales value declined 2.7% MoM and 3.3% MoM when motor vehicles were excluded.

Here's more from OCBC:

Part of the deterioration came from drop-off in sales receipts of big ticket items i.e. watches and jewellery and telecommunications apparatus and computers after previously recording two straight months of gains.

Furthermore, cuts in discretionary spending have become more evident e.g. food and beverage (F&B) service establishments saw a third straight month of 1.4% MoM sales volumes declines in May while department stores dipped 2.6% MoM over the same period.

Unsurprisingly, with the lingering weakness in global economies affecting consumer spending patters, both retail sales volume and value have persisted on their downward trend on a MoM basis. Given the developments in May, we are now noticing a similar trend emerge on YoY figures. Although YoY gains are still positive, increases in retail spending have now shrunk to less than one percentage point in May, and could potentially swing to negative territory in the later part of the year.