Thursday, December 23, 2010

Retail Sales slip again

Although we are right up to Christmas the CSO are still releasing data.  Today we got the first estimates of the November Retail Sales Index.  The all-business index is showing some stability but as is usual we will focus on the retail sales index excluding the motor trades.

In November the motor trades make up 14% of the index.  Here are the value and volume indices for the remaining 86% since January 2008.  The  most recent trend is down, particularly for the value index.  The gap between the two indices continues to grow, reflecting the deflationary pressures that still persist in many retail sectors and a greater “value for money” drive among consumers.

Ex Motor Trades Index to Nov

The value of sales fell by 0.4% in the month, with volume declining 0.2%.  This index has not shown any sign of increases since April.  The only positive monthly changes recorded since then were in August and they were only just above zero.

Monthly Change Ex Motor Trade Index to Nov

After edging towards positive territory for the past few months the annual changes took a slight dive in November.  By value sales are now 1.9% behind last year with a decline of 0.9% in the volume index.

Annual Change Ex Motor Trade Index to Nov

The retail sales index rose in the early part of the year to April.  However, since then the downward trend has resumed.  In the last six months the value index of retail sales excluding the motor trades is down 4.8% with volume down 2.4%.

The National Accounts might indicate that the economy is growing but this is entirely an export-driven trend.  The domestic economy continues to deteriorate.  The recent inclement weather is likely to further damage retail sales, though shoppers may come out in force in January. 

However, with tax increases and benefit cuts soon to come into force we can expect retail sales to continue to struggle.  In particular, the annual growth rates will deteriorate further as the comparison will be made to the short-lived “turning the corner” momentum of the early months of 2010.


  1. Seamus, Can I suggest that you should consider linking this post and your earlier posts together? The discrepancy between the employment and unemployment figures is partially down to emigration, which may also explain the lack of purchasers of certain products. The decline under food, beverages & tobacco in particular!

  2. This slippage is very likely to continue into December as a result of all the snow falling across the country. I would expect the December figures to be very poor meaning that we will have to wait for the New Year before retail sales can recover.

    What is positive is that the falls in retail sales this year are much smaller than in 2009. However if we want to ensure this economy grows next year, rising retail sales would be a help. This is unlikely to happen because, as you mentioned, tax increases and spending cuts announced in the Budget will reduce consumers' disposable income and therefore cut effective demand in the economy.

    The return of inflation over the next 2 years could act as a countervailing force to further cut-backs in consumer spending in the value index of retail sales. Rising prices could lead to overall stability in the value index during the next 2 years. This would have the secondary effect of stabilising VAT receipts for the Exchequer.

  3. Hi Niall,

    That is an interesting concept. In the week or so I may see if I can get a graph or two out of that and throw them up. A decline in the size of the market may definately be having an effect.