Retail Sales volume takes off

After many false dawns it finally seems as though there has been a notable increase in ‘core’ retail sales, i.e. excluding the motor trades.  The CSO have published the December Retail Sales Index and, for volume at least, it paints a very positive picture.  The value of retail sales has been on an upward trend though is much more muted.

The annual changes for both series have been positive for 14 months in a row.

The monthly changes are more volatile.

So how does the 2014 Christmas period compare to other years?  One sub-category that can be used to look at this is retail sales in “Department Stores”.  Here is the unadjusted series for this category [The graphs above are all seasonally adjusted which has a massive impact on retail sales statistics.]

Compared to the 2007 level, the volume of retail sales in the “Department Stores” category were 18 per cent higher in 2014.  On a value basis sales were 10 per cent lower this year compared to December 2007.  We are buying more stuff but at lower prices. [Population, 2007: 4,375,000    2014: 4,610,000    +5.4%]

Here is the adjusted series for “Department Stores” from the above series. Note different vertical axis scale.

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Retail sales hit reverse

Yesterday’s release by the CSO of the September Retail Sales Index shows that the increases recorded over the past year or so have stalled, and in value terms have almost fully being reversed.  As per usual we focus on the RSI excluding the motor trades.  In the past two months the value of retail sales has fallen 1.4 per cent with volumes falling 0.6 per cent.

These are reflected in the annual changes which are still positive but the value index is now showing annual growth of just one per cent.

The monthly changes highlight the volatility in the series so reading anything from changes over a two-month period is not very reliable.  It is also possible that the September figures will be revised in later RSI releases.

For the moment at any rate we can say that the figures are not reflective of “recovery”.  What will the final quarter of the year bring?

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Retail Sales are going nowhere (but up on last year)

The May update of the CSO’s Retail Sales Index doesn’t show a whole lot of movement.  The May readings (though provisional) of both the value and volume for the series of the index excluding motor trades are almost exactly the same as those recorded six months ago in December 2013.  There has been some fluctuation in the interim but there has been no overall positive or negative movement in the past six months.

It can be seen that both series are ahead of where they were in the first half of 2013.  Thus the annual changes paint a slightly healthier picture.  The recent annual increases are the fastest since early 2008 and are only matched by those that were seen around the time of the temporary fillip that resulted from the ‘digital switchover’ of the broadcast television signal in October 2012.

However, unless there are increases over the coming months to match those seen towards the end of 2013 the annual changes will reduce to zero.  Still, on the goods side at least, we are likely to see an annual increase in Consumption Expenditure for H1 2014 compared to H1 2013.

The monthly changes again highlight that it is difficult to read anything into changes over a short timeframe given the volatility in the series.

Overall, retail sales are ahead of where they were this time last year but the growth of the final few months of 2013 has not continued into 2014.

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Retail sales fall sharply

The CSO have published the provisional figures for the March retail sales index.  Once the motor trades are stripped out (which have a weighting of 29 per cent in the All Business Index in March) we see the following for the value and volume series.

The strong increasing trend (in volume in particular) seen toward the end of 2013 has been replaced with an equally strong downward trend.  However, the scale of the year-end increases mean that even with the recent falls the annual comparisons paint a slightly better picture.

In real (i.e. volume) terms retail sales in the first quarter of this year were around three per cent higher than in the same quarter last year.  If the recent monthly changes are repeated over the next quarter then the annual comparisons in volume may not be positive for much longer.

The monthly changes are very volatile and March 2014 figures are only provisional but it can be seen that the monthly drops in March were the largest such declines going back to late 2012 (and that was following the spike in electrical goods caused by the digital switchover).

At the time of the budget last October the Department of Finance projection was that the Consumption Expenditure component of real GDP would grow by 1.8 per cent in 2014.  Last week’s SPU increased this to 2.0 per cent.  Thus far the retail sales figures would suggest that is achievable but there will be significant increases required just to keep pace with the increase seen towards the end of 2013.  The DoF forecast is plausible particularly when the strong start to 2014 for the Motor Trades are included.

Increased car sales make the consumption and retail sales figures look better but the overall impact on the economy is much more limited as the increased activity is the result of increased imports.

In the six months to February 2013 imports of Road Vehicles were €895.4 million.  In the same period to February 2014 these imports were €1,137.3 million, a rise of 27 per cent.  Of course, there are some gains to increased car sales.  The operating surplus and maybe even employment in the car sales trade increases and the government sector is a beneficiary through increased VAT and VRT receipts.

Consumption Expenditure also includes services not measure by the Retail Sales Index such as housing and accommodation, utilities, public transport, restaurants and communications as well as education, health, personal, professional and financial services.  The CSO does have a Monthly Services Index but that is driven by business-to-business services more than end-user consumption of services.

Anyway the take-out feature of this month’s RSI release is the sharp drop since the start of the year once the motor trades are excluded.  This is not reflective a nascent recovery.

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Retail sales up (on the year)

In adjusted terms, core retail sales fell in February but remain much higher than they were at the same time last year.

This chart excludes the Motor Trades and a strong upward trend can be seen, for the volume series in particular, from around spring 2013.  Volume in the Motor Trades category is up 15 per cent in the year but fell six per cent in the month.

In annual terms the increase in retail sales volume is close to the level seen during the spike in sales caused by the ‘digital switchover’ in late 2012 and higher than at any other point since the start of 2010.  It can seen that the annual growth in the value series is much more muted.

All in all, good but only weakly so.

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Retail sales (volume) did surge this December

Statements from Retail Excellence Ireland provided some contrasting views of the level of retail sales in December.  On December 24th it was reported that:

Retailers see fall in Christmas trade compared to 2012

while just a few days later a report from another REI statement was published under the following headline:

Retailers see strong start to post-Christmas sales

Unlike December 2012 when they got it all wrong, CSO data released today shows that REI’s take on December 2013 was pretty accurate: consumer purchases increased but they waited until the lower prices in the sales to do so. 
Here is the December 2013 Retail Sales Index excluding the motor trades.

The increase in the volume series is pretty clear and the December reading is now higher than at any point going back to mid-2010, seasonally adjusted.  The value series did increase in December but by a much smaller amount.
If we look at the unadjusted series we can see concentration of retail sales in December of each year.

In December 2013 the unadjusted volume series was close to the levels seen in 2006 and 2008, though nine percent below the 2007 peak.  The drop in the December readings for the value series was much more pronounced with a clear gap emerging in December 2009.  The value series in December 2013 was 18 percent below the 2007 peak.
December 2013 volume was 5.5 percent higher than the December 2010 trough but the value series only shows a 3.6 percent increase.  We are beginning to buy more but are not having to spend as much doing so.
Returning to adjusted series here are the annual changes excluding the motor trades.

The annual changes in Q3 were negative but the increases in the latter part of the year pushed them back into positive territory.  It remains to be seen whether the increase in December was a once-off splurge or reflects an emerging frugality fatigue amongst consumers who are going to continue to spend more.  Tweet

Retail Sales tick upwards

Today’s release of the November Retail Sales Index has some reasonably positive news (which was also seen in EU data released by Eurostat earlier). Excluding motor trades Irish retail sales edged higher in November, though the effect was stronger for volume than for value.

The annual changes also improved with the volume series showing a 1.6 percent increase from a 1.8 percent decrease in October, though it must be remembered that some of the recent volatility in these is down to comparisons being with 2012 at a time when the “digital switchover’ led to an increase in electrical goods sales.

Of course, it the December figures that really matter.  Last year, Retail Excellence Ireland claimed that the run up to Christmas 2012 was "the best in five years”.  This was not reflected in the subsequent CSO data.

This year, REI were more muted in their analysis of the pre-Christmas spree but they were back on message fairly quickly declaring that St. Stephen’s Day was the start of the “biggest sales success since Christmas 2008.”  Whatever the official figures from the CSO reveal about December REI can claim to have seen it coming.

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Retail sales get stuck

The CSO have published the September update of the Retail Sales Index.  Excluding the motor trades, the volume index was unchanged in the month with the value index showing a slight decline.  The increases seen during the sunny summer have not been sustained into the autumn.

In annual terms, the 2013 figures are now coming up against the short-lived increase that occurred from June to October 2012 (in part driven by the digital switchover for television signals).  This has brought the annual change back towards zero and negative annual changes are likely for the next few months.

A continued drop in the value series will have consequences for VAT receipts.  Finally here are the monthly changes in both series.

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Retail sales slip back

After heating up in July, retail sales slipped back slightly in August.   Here is the retail sales index excluding the Motor Trades since January 2010.

One feature in the August figures is the difference in the performance of the value and volume series.  The volume series is down about 0.2% on the month but the value series is down 1.4%.  The CPI was flat in August with monthly prices decreases for some categories that feed into the RSI such as food (-0.6%), alcohol (-0.6%), medical products (-0.9%), furniture (-0.3%). 

These changes mean that the volume of retail sales is up 1.3% on last year, while the value index is down 0.2%.  This augurs well for the contribution retail sales make to real GDP (around half of the final consumption expenditure component of GDP is reflected in the Retail Sales Index) but the prospects for nominal GDP remain muted.  The link between nominal GDP and deficit targets was addressed in a previous post.

The recent volatility in the monthly changes is evident from the following chart.

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Retail sales heat up

Among several data releases from the CSO today is the July Retail Sales Index.  The overall index is heavily distorted by the motor trades with a weight of 21.6% in the index for July.  As a result of the introduction of the ‘132’ number plate Motor Trades in the index show a 25% annual increase over July 2012.

As per usual the focus here is on the RSI excluding the motor trades.  This shows a much smaller increase than the overall index but is not subject to the artificial boost brought about by the push of some new car sales into July (rather than an increase in new car sales).

Here is the index excluding motor trades since the start of 2010.

As can be seen the performance after the local maximum in October 2012 was weak.  The downtrend ended in April of this year and July provided a jump back close to those levels seen in October last year (which were in part helped by the digital switchover).  One explanation for the July increase is potentially the spell of exceptionally good weather at the time.

The largest monthly increases in volume were seen in:

• Bars +2.6%
• Non-Specialised Stores +3.3%
• Food, Beverages & Tobacco +4.2%
• Clothing, Footwear & Textiles +5.3%
• Hardware, Paints & Glass +5.1%
• Books, Newspapers & Stationery +16.2%

some of which could be influenced by the weather.  The largest monthly decreases in volume were seen in Electrical Goods (-4.9%) and Fuel (-4.2%).

The annual changes show that the July increase resulted in a modest annual increase.

While the monthly changes highlight the inherent volatility in the series, and with less exceptional weather since, it is possible that subsequent releases will see a return to the sequence of monthly decreases seen around the start of the year.

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Retail Sales reverse trend

The Consumption figures in yesterday’s Quarterly National Accounts reflected a trend that was evident from the sharp decline in the retail sales index that began last Autumn.  However, the May Retail Sales Index shows a reversal (for one month anyway) of the downward trend.

The rise in May was not enough to bring the annual changes in positive territory.  The June figures will likely show an annual increase but there will have to be a concerted rise over the coming months just to keep pace with the increases that were seen during the summer and early autumn last year.

Finally, the monthly changes highlight the volatility of the series so a trend reversal of one month should be considered indicative of very little.

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Reasonably strong retail sales?

At the time of Budget 2013 back in December the Department of Finance projections indicated that the Consumption Expenditure component of GDP would decline by 0.5% in real terms in 2013.  The Department has revised their projections in the 2013 Stability Programme Update published yesterday.

On Consumption the SPU (page 12) says :

Consumer spending held up relatively well at the end of last year, and core retail sales have been reasonably strong in the early part of this year. Slightly better-than-assumed labour market conditions and the likelihood of lower-than-anticipated inflation will also support consumption which is now projected to increase by 0.2 per cent.

Have core retail sales been “reasonably strong” to lend support to this revision from –0.5% to +0.2%?  If one looks at the annual changes in the series there does seem to be some support for this.

From August 2012 to February 2013 the annual change in both the value and volume of core retail sales was positive, though provisional data indicate that this was reversed in March.  But the series of 12-month changes can obscure what is happening now.  Here are the index values for the series (scaled with January 2010 = 100).

It is clear that the most recent figures are far from cheery.  After been largely flat through 2011 and the start of 2012 core retail sales did show a reasonably strong rise from July to October last year (helped in part by the digital switchover) but have now reversed all of those gains and have shown monthly declines for four of the past five months.  In the first three months of 2013 core retail sales have not been reasonably strong; they have been weak.

The motor trades are excluded from core retail sales but are included in Consumption (c. 4%).  How have they been faring out?

Down 8% on 2012, though there is the possibility that the new 131/132 license plate system will push more of this year’s sales in the second half of the year.

And finally there is consumption on services.  The is no Retail Sales Index equivalent for services but the CSO have begun producing a Monthly Services Index which looks at all services, rather than just those purchased by consumers.  From that we can extract two series which may be useful here.

• Accommodation and Food Activities
  • NACE 55 Accommodation
  • NACE 561, 562 Food Services Activities
• Other Services
  • NACE 68 Real estate activities
  • NACE 92 Gambling and betting activities
  • NACE 93 Sports activities and amusements and recreation activities
  • NACE 95 Repair of computers and personal and household goods
  • NACE 96 Other personal service activities

Both are heading in the wrong direction and Other Services are  well below the levels seen at the start of last year, though this didn’t last beyond April.  The volatility also suggests that short-term trends can be quickly reversed.  It should also be noted that these are value or nominal series whereas the discussion up to now as been on volume on real series.  The CSO hope to progress to producing a volume index in the future.  The sample for the services index is also worth noting:

The sample size is approximately 2,100 enterprises. The sample comprises a census of all enterprises with an annual turnover value of more than €20m or enterprises with more than 100 persons engaged. The remainder of the target population is stratified using 2-digit Statistical Classification of Economic Activities in the European Community, i.e. NACE Rev. 2 classifications. Each of these 2-digit NACE sectors are further subdivided into strata based on turnover. A simple random sample is then drawn from each stratum. Retail and Motor Trade figures are taken from the separate Retail Sales Index sample of approximately 1,400 enterprises.

All told, there is little thus far in 2013 to indicate that retail sales have been “reasonably strong”.  Maybe there will be a minor boost from tomorrow’s ECB Governing Council meeting …

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The Property Tax as a Progressive Tax

The passing of the legislation for the (Local?) Property Tax and the announcements from the Revenue Commissioners of how they intend to collect it have once again put this relatively minor issue towards the top of the public debate.

The now-abolished €100 Household Charge was expected to raise €160 million in 2012 from the 1.6 million liable properties.  In 2013, it is expected that the half-rate Property Tax will raise €250 million – an increase of €90 million.  This is an average annual increase of €56 per household or a little more than €1 a week.

Is the Property Tax progressive?  Without detailed household income and property valuations it is difficult to say but an broad overview of income by tenure status suggests it is.  This is a table from the 2009/10 Household Budget Survey.

[This is data up to 2010.  The recently released Survey on Income and Living Conditions put gross weekly household income at €1,015 in 2011, a 1.1% drop on the above figure.]

Owner-occupiers have higher incomes than other categories.  The group who own their home outright have an average annual gross household income (direct income plus state transfers) of nearly €47,000, while owner-occupiers with a mortgage had an average annual gross household income of €75,000.  If is, of course, the case that averages only provide a partial picture and a fuller insight into the distribution would be better.  Alas it is not available.

Households living in rental accommodation have lower gross incomes than owner-occupiers and are not legally liable for the Property Tax (though determining the economic incidence of the tax is difficult).

There are around 1.15 million owner-occupied homes in Ireland, roughly even divided between those who own their home outright and those who have a mortgage on their home.  There are around 450,000 households in rented accommodation with 150,000 renting from a local authority or voluntary body and the other 300,000 households renting from a private landlord.

Finally, here is an extract from a table in the SILC on disposable income (gross income after direct taxation) though it doesn’t break down home-owners into mortgaged/non-mortgaged households.

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Retail Sales slip again

With December’s retail sales failing to live to the the Xmas hype, today’s release of the January 2013 Retail Sales Index does little to alter the landscape.  Retail sales excluding the motor trade fell on a seasonally adjusted basis in January.  The fall was greatest in the volume series which has given up more than half of the increase that occurred in the six months after June 2012.

On an annual basis both the volume and value indices are above where they were at the same time last year (but only just).

The monthly volatility in the series is evident  but after a sequence of four monthly increases both the volume and value series have recorded monthly declines in two of the past three months.

Turning the corner? Caveat emptor.  We’ve been offered that pup before.

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Where was the Xmas “surge” in Retail Sales?

The CSO have released the December 2012 Retail Sales Index.  There is something missing from the data – the much heralded “surge” in retail sales that apparently took place around the Christmas period.  Here is the core retail sales index which excludes the Motor Trades.

There was an increase in December but only marginally.  The trend in retail sales is up but this data do not reflect what was feted as “the best Christmas for retailers since 2007”.  Here it might be a little instructive to use the unadjusted series that just looks at the amount of retail sales without taking seasonal factors into account.  This chart has the unadjusted series for core retail sales (with December 2008 equal to 100).

Unsurprisingly there is a spike in retail sales each December.  At 94.2, this year’s December peak was higher than each of the last two years (92.5 in 2010 and 93.3 in 2011 using the base in the chart) but was below both 2008 (100) and 2009 (94.7).

Maybe we are not looking in the right place.  It would be great if the CSO provided a resource that allowed us to create selected sub-indices from the categories provided.  The retail sales shown in the above charts include fuel, furniture, hardware, medicines and other categories which were likely excluded when Retail Excellence Ireland were making their seasonal claims.  These items only make up about one-fifth of the indices shown above so their effect is unlikely to be significant.

Although limited we can use one of the indices to check for the retail surge.  Non-food sales in Department Stores are only about 1/12th of the above indices but might be expected to reflect the broader pattern in Christmas shopping.  Here are the unadjusted series.

That seems more like it.  The volume of non-food sales in Department Stores in December 2012 was indeed the highest since 2007.  In fact, volume was nearly 20% higher than 2008.  However, the value index was identical.  See here.  The adjusted series also shows a jump last month.

And this also shows that the trend in sales in Department Stores has been positive since about April of last year.  However, apart from Department Stores it is hard to find evidence of the Christmas surge.  Sales in bars did jump 5% in December but the underlying trend in this sector is unmistakeable.

The retails sales of electrical goods (computers and peripherals, televisions, radios and DVD players, games consoles and software and telecommunications equipment) has been positive in recent months (in volume terms at least). 

The recent jump was due to the digital switchover in October rather than any pre-Xmas exuberance.  Even still, the volume in this category in December was up 4% on last year, though the value of sales was down by around 1%.

It looks like the warning at the end of this post that “the plural of anecdote is not data” is borne out by the above data.

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Retail Sales slip

There isn’t much that goes to plan in the Irish economy but a monthly drop in November’s retail sales after the fillip offered by the digital switchover at the end of October went as expected.  This is from the November Retail Sales Index published by the CSO today.

Retail sales had been on an upward trajectory since July and are still well ahead of the June levels but the annual growth that was seen in the three months is no longer present.  In order for the annual change to remain above zero for December, monthly growth of around 0.5% will have to be seen.

The monthly changes continue to be volatile and as indicated above November recorded the first monthly declines since June.

Although electrical goods showed the expected decline (down 18% by volume on the month) there were falls in nine of the 13 business categories reported by the CSO.  Monthly volume falls in excess of 1% were also recorded for:

• Food beverages & Tobacco –1.7%
• Fuel – 3.2%
• Books, Newspapers and Stationery –1.5%
• Other Retail Sales –1.8%

The categories showing a monthly volume increase were:

• Non-Specialised Stores +0.1%
• Department Stores +2.4%
• Furniture and Lighting +2.7%
• Bars +3.2%

There has been a lot of talk of strong retail sales in the run to Christmas and in the post-Christmas sales.  It will be next month’s RSI before this will be seen.  Retail Excellence Ireland have been particularly bullish in the past few weeks but at the end of November (the time the above data was being collected) they issued this press release.

NOVEMBER 27TH 2012
Irish retailers are predicting a drop of -0.47% in Christmas 2012 Trading, according to a survey published today by Retail Excellence Ireland (REI), Ireland’s largest retail industry trade body.

The December 2012 and January 2013 Retail Sales Index releases will show us whether things went to this plan.

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