Strong labor market to boost retail sales in 2011

Retail sales will this year find support from good job prospects and rising wages, said HSBC.

Tourism is also an important support pillar for retails sales, and tourists are expected to continue to flow in with growth in Asia projected to hold up and due to the allure of the two IRs, said Leif Lybecker Eskesen and Prithviraj Srinivas, Chief Ecnomist for India & ASEAN, and Economics Associate, of HSBC.

Even as the economy settles at a more sustainable rate of growth in the coming quarters, partly due to elevated oil prices, capacity will remain tight and spur demand-led inflation pressures. The recent re-centering by the MAS was, therefore, the right move.

The timing of the Lunar New Year pushed the retail sales numbers around more than expected. However, retail sales should find support this year from strong labor market conditions and a continued inflow of tourists.