The CSO has just released the June update of the Retail Sales Index. The first impressions are that retail sales are rising and some media reports reflect this (Irish Times: Retail Sales Rise in June). It is true that the overall index is up 0.2% on June of last year, but if we strip out the effect of the motor trades a somewhat different picture emerges.
The motor trades category makes up 23.2% of the retail sales index in June and the motor trades had an artificial jump in June created by the closing of the car scrappage scheme. By volume motor trade sales were 22% up on the same time last year.
What do we see when we look at the other three-quarters of the index?
This is no where near as positive as the overall index (graph here). The best that can be said about the above graph is that the rate of decline seen since March eased somewhat in June. However, as has been said over and over in this crisis, “getting worse more slowly is not the same as getting better”. Retail sales are continuing to decline.
The relative improvement compared to the last few months can be seen when we look at the monthly changes but both series remain below the zero line.
The annual changes show how moribund retail sales remain.
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While I appreciate this is bad news for the retail sector - and VAT collections - isn't a shift from spending to saving required as an element of deleveraging the economy? Also, looking at the widening gap between sales volume and value prompts the question of whether "rip-off-direland" isn't slowly but surely being addressed?
ReplyDeleteI might be guilty of seeing a half-full glass where most observers discern slops, but looking at these graphs makes me wonder if there isn't a story there of an economy rebalancing itself - though clearly this process won't be without further pain.