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RETAIL sales fell 8.2 per cent year-on-year in June, but there are signs that consumer confidence is on the mend, economists say.
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Excluding vehicles, retail sales were down 1.5 per cent from June 2008, according to data released yesterday by the Department of Statistics.
'The rate of year-on-year decline moderated to minus 8.2 per cent from minus 10.4 per cent in May, which beat consensus and our expectations of minus 9.2 per cent and minus 8.6 per cent respectively,' said Citigroup's Kit Wei Zheng.
Compared with May, retail sales in seasonally adjusted terms in June were up 2.3 per cent including vehicles and 3.7 per cent excluding vehicles.
HSBC economist Robert Prior-Wandesforde is fairly upbeat. 'Consumer spending is looking as though it is on the mend and we expect the recovery in exports to expand beyond pharmaceuticals soon,' he said. 'All in all, the future is looking a lot brighter than it was only a few months ago.'
Sales of motor vehicles plunged 22.8 per cent in June from a year back. And lower petrol prices contributed to a 19.9 per cent drop in sales revenue at service stations.
On the other hand, sales of telecom apparatus and computers were 14 per cent higher. Small-ticket discretionary items such as wearing apparel and footwear (minus 2.5 per cent), furniture and household (minus 0.2 per cent) and recreational goods (minus 3.7 per cent) registered smaller year-on-year declines in June than in May.
'While the frontloading of motor vehicle sales in Q1 2009 and a decrease in COE quotas may continue to weigh on headline retail sales, the continued month-on- month seasonally adjusted rise in retail sales excluding motor vehicles is encouraging as it signals that consumer confidence is returning,' said Citigroup's Mr Kit.
And Barclays Capital economist Leong Wai Ho said: 'We believe the gradual recovery in discretionary spending can be sustained in July and August.'
Meanwhile, the catering trade was down 1.8 per cent year-on- year in June but up 3.4 per cent in seasonally adjusted terms from May 2009.
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