Irish retail sales up 1.4% in volume terms year-on-year in November

New monthly Irish retail sales figures for November, published this morning were weaker than expected, but still showing consumers continuing to spend solidly on an annual basis despite bank deposits being at record-highs. Headline sales were down 3.3% in the month but were up 1.4% in the year in volume terms, as against the revised annual rise of 3.9% (+3.0%) posted in October. In the first eleven months of 2019, sales were 1.8% higher on average than in the same period of 2018.

Given all the hype about “Black Friday”, the figures on the surface look disappointing, but it should be remembered that the data are seasonally-adjusted and as such may be distorted by the adjustment factors. In fact, anecdotal evidence suggested that retailers had a strong end to 2019.

Excluding motor trades, retail sales were down 1.2% in the month but were 1.9% higher in the year, down from the revised annual rise of 3.7% (+3.2%) posted in October. “Core” sales were 4.2% higher on average year-on-year in the January-November period. 

The sectors with the largest monthly volume decreases in November were Pharmaceuticals, Medical & Cosmetic Articles (-9.0%) and Food, Beverages & Tobacco (-6.5%). Meanwhile, the sectors with the biggest monthly increases in the month were Bars (+2.1%) and Furniture & Lighting (+2.0%).

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 few 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 consumer spending patterns in the Republic over the next twelve to eighteen months, but I am still expecting to see overall positive personal consumption increases in the Irish economy in 2020 as things currently stand.

The “core” retail sales figures for the first eleven months of 2019 suggest that the Irish economy continued to grow at a solid pace in the January-November period.  

For 2018 as a whole, headline sales were officially 3.8% higher on average in volume terms than 2017, down marginally from the 3.9% rise posted in the previous year. Meanwhile, “core” sales were 3.7% higher on average, down from the 5.8% rise posted in 2017. 

As regards 2019, we think personal spending will post another positive increase as both employment and disposable incomes rise. An increase of 1.8% is now projected for headline sales, with “core” sales forecast to be 4.0% higher in the year.  

Weaker personal consumption growth is projected for 2020. I am currently projecting a volume increase of 1.0% in headline sales and a 3.0% rise in “core” sales.