Singapore’s total retail sales value grew 6.2% y-o-y to $3.5 billion in March, according to figures released by the Department of Statistics (SingStat) on May 5.
While the 6.2% expansion marks the second straight month of growth since February, it missed economists’ expectations of a 7.1% increase y-o-y.
However, the figures are "encouraging", according to OCBC Bank's head of treasury research and strategy Selena Ling.
"The positive retail sales data streak may be buoyed somewhat by the low base last year, but is also reflective of the general improvement in domestic demand conditions with the resumption of more economic activities and the stabilisation in the local unemployment rate," she writes.
Of the total sales value, online retail sales made up an estimated value of 11.8%, compared to the 10.1% recorded in February.
Excluding motor vehicles, total retail sales increased by 4.4% y-o-y to $2.9 billion in March, slowing down from the 7.7% y-o-y growth logged in February.
In March, the higher retail sales were led by discretionary industries such as Watches & Jewellery, Wearing Apparel & Footwear and Recreational Goods, which grew by 60.2% y-o-y, 35.6% y-o-y and 28.3% y-o-y respectively.
The larger growths, according to SingStat, were due to the lower base in March 2020.
Other segments such as Computer & Telecommunications Equipment, Petrol Service Stations, Motor Vehicles, Optical Goods & Books and Furniture & Household Equipment saw growths of between 1.8% y-o-y to 19.9% y-o-y.
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In contrast, Supermarkets & Hypermarkets and Cosmetics, Toiletries & Medical Goods led the declines at -14.0% y-o-y and -13.2% y-o-y respectively due to the higher base in the same period the year before.
On a seasonally adjusted basis, total retail sales increased by 3.0% m-o-m, and 2.2% m-o-m excluding motor vehicles, especially discretionary industries such as Motor Vehicles, Watches & Jewellery, Wearing Apparel & Footwear and Department Stores.
Conversely, sales of Furniture & Household Equipment declined 6.2% during this period, as demand for furniture slowed down with more people returning to the workplace.
Sales of food & beverage services increased by 8.0% y-o-y to $730 million in March, a reversal from the 3.4% y-o-y decline in February.
The growth was mainly attributed to the lower base in March 2020 when safe distancing measures were first introduced.
Of the total sales value, 23.5% were online sales, compared to the 22.2% recorded in February.
On a seasonally adjusted basis, total food & beverage sales in March registered 4.0% growth m-o-m.
Within the food & beverages sector, Restaurants saw 17.9% y-o-y growth in sales due to the lower base in the year before.
Sales in Fast Food outlets and Cafes, Food courts & Other eating places saw growths of 5.5% y-o-y and 5.6% y-o-y respectively.
Sales of Food Caterers fell 25.0% y-o-y as demand for event catering remained low.
All segments saw m-o-m growths of between 0.3% to 9.0%.
"Looking ahead, while the April retail sales data is likely to look fantastic on a y-o-y basis due to the low base last year, it is possible that the May data may hit a temporary speed bump due to the return to Phase 2 restriction measures from May 8 to 30. One concern will be if the restrictions get extended or the COVID situation improves so we can revert to Phase 3 conditions in June," says OCBC's Ling.
For the FY2021, Ling has reduced her retail sales growth forecast slightly to 11% y-o-y from 12%, factoring in the dent in May due to the return of Phase 2 restrictions and tightening of border controls. That said, "this would still be a recovery from the sharp 15.3% y-o-y contraction in retail sales seen last year during the Covid-induced recession," she notes.
The Singapore research team from RHB Group Research says it sees retail sales containing to "sustain through the new set of tighter measures".
"For April, retail sales should continue to record positive momentum as foot traffic is observed to be gradually returning to pre-pandemic levels. We expect the low-base effect to contribute to growth in retail sales for April together with improvements in consumer sentiments," it writes.
"Following from March, we should see a rise in spending in discretionary industries as domestic demand begin to recover. Segments of the retail sector which are reliant on international visitors should still feel the pinch from the ongoing travel restrictions."
