The pace of decline in retail sales volumes slowed in May due to a slight pick-up in car sales but the sector remains extremely weak according to economists.
uring the 12 months to May sales volumes fell 15.4, down from a 17 per cent fall in the year to April.
One of the main reasons for the decline was a 39.8 per cent drop in annual car sales, despite a monthly rise of 3.3 per in May.
However, Ulster Bank economist, Lynsey Clemenger, said car sales masked a disappointing decline in core retail sales which dropped 9.2 per cent in the year to May, the sharpest fall on record.
She said there had been evidence in recent months of a levelling off in the annual rate of decline in core retail sales but the May data called this into question.
Based on the three month moving average retail sales no longer showed any sign of stabilising, she said.
Food sales fell 0.9 per cent in May bringing the annual decline to 4.6 per cent, contributing to an unprecedented decline in core retail sales.
Sales volumes in non-specialised stores – predominantly supermarkets – were 4.7 per cent down in the year to May while bar sales were 11.4 per cent down with fuel sales 11.2 per cent lower.
There was evidence too that aggressive discounting by retailers to boost sales was no longer attracting shoppers as clothing and footwear sales declined 5.2 per cent in the month to May.
Sales of furniture and lighting products were down 40 per cent in the year to May while hardware, paints and glass were down 17.9 per cent. Electrical goods sales were down 16.1 per cent over the same 12 month period.
The value of retail sales dropped 19.4 per cent in May and by 1.4 per cent in the month.
Alan McQuaid, economist with Bloxham stockbrokers said while the annual rate of decline was extremely weak “at least the rate of decline was the lowest so far this year”.
He said price reductions have kept core retail sales fairly solid in recent months and said persistent deflation should boost sales going forward.
Mr McQuaid added that consumer sentiment had hit a 14-month high in June and that as supermarkets engaged in price wars and UK chains started to bring their prices down in line with their shops North of the Border “this improving consumer spending trend looks set to continue over the coming months”.
Dermot O’Leary, Goodbody economist, said while the dramatic decline in retail sales seen in the first quarter had eased, the area remained very weak even when the impact of car sales was excluded.
He said there was evidence discretionary purchases such as clothes were now starting to decline having held up relatively well due to discounting. Only two retail areas have not seen price declines over the last year, books and newspapers, and pub prices, he added.
