Irish Retail Sales (September 2018)

• Headline sales up 1.5% in the month and 6.5% in the year in volume terms
• Electrical Goods and Hardware, Paints & Glass post biggest monthly increases
• “Core” sales (i.e. excluding cars) up 2.8% in the month and 6.3% in the year
• Headline sales up 3.7% on average year-on-year in first three-quarters of 2018
• “Core” sales up 4.0% on average on annual basis in first three-quarters of year
• Headline sales forecast to be up 3.5-4.0% for 2018 as a whole, with “core” sales up 4.0-4.5%

Retail sales up 6.5% year-on-year in volume terms in September

New monthly figures for September, published this morning, were much better than we expected, with consumers continuing to spend strongly on an annual basis despite savings (bank deposits) being at record-highs. Headline sales were up 1.5% in the month and 6.5% in the year in volume terms, as against the revised annual rise of 2.5% (+2.6%) posted in August. In the first three-quarters of 2018, sales were up 3.7% on average on the same period last year.

Excluding motor trades, retail sales were up 2.8% in the month and were 6.3% higher in the year, up from the revised annual increase of 3.8% (+4.0%) posted in the previous month. “Core” sales were 4.0% higher year-on-year in the January-September period.

The sectors with the largest monthly volume increases in September were Electrical Goods (+9.3%) and Hardware, Paints & Glass (+7.0%). Meanwhile, the sectors with the biggest monthly decreases last month were Department Stores (-4.2%) and Books, Newspapers & Stationery (-1.6%).

Retail sales continue to remain erratic on a monthly basis and are still swinging back and forth, but the underlying trend is positive. Even with the fluctuation in consumer sentiment, overall personal spending has been positive in the past couple of years, boosted by the increase in the numbers employed in the country. This is despite the fact that the weakness in sterling since the June 2016 “Brexit” referendum has enticed some shoppers to spend in Northern Ireland.

What happens on the currency and “Brexit” fronts will be important factors in determining overall consumer spending patterns in the Republic over the next twelve to eighteen months, but we are still expecting to see healthy personal consumption in the Irish economy over the remainder of this year at least and into 2019 as well as things currently stand.

For 2017 as a whole, headline sales were officially 3.9% higher on average in volume terms than 2016 while “core” sales were 5.8% higher.

As regards 2018, we think personal spending will post another positive increase as the unemployment rate continues to drop and disposable incomes rise. Following these latest figures, we now think headline sales will post an increase of between 3.5% and 4.0% this year, with a rise of 4.0-4.5% projected for “core” sales.

Retail Sales Data (Source: CSO)
S.A. Indices
(2015 = 100) Total Volume Index % Change Month % Change Year Ex. Motor Trades Index % Change Month % Change Year
2017 September 111.5 -2.3 4.3 111.2 0.3 6.4
2018 July 121.1 6.2 4.9 114.5 -0.5 2.9
2018 August 117.0 -3.3 2.5 115.1 0.5 3.8
2018 September 118.8 1.5 6.5 118.2 2.8 6.3

Alan McQuaid (30/10/18)