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The retail sector could face an uneven recovery in the next months, according to UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting.

Key Quotes

“Singapore retail sales fell 5.7% y/y in August 2020, a smaller decline compared to July’s -8.5% y/y. Excluding motor vehicle sales, retail sales sank by a larger margin of 8.4% y/y in the same month.”

“Despite seeing another month of y/y contraction in August, retail sales on a m/m seasonally-adjusted basis have improved across most sectors. This was seen in the sales by petrol service stations, watches & jewellery, and furniture & household equipment.”

“Online sales as a share of total retail sales grew to 10.9% in August 2020, up from the previous month level of 10.7%, suggesting that e-commerce demand continued to stay resilient.”

“Notwithstanding the positive m/m growth in most sectors, we note that the rate of growth has tapered sharply from the levels seen in June and July 2020. This could suggest that the initial domestic pent-up demand for a broad of Singapore’s retail sales segment has gradually dissipated since Phase Two started on 19 June 2020.”

“We maintain our view for Singapore’s retail sector to recover, albeit slowly, given the absence of international tourism demand. The return of consumer demand should also cushion the rate of contraction on a year-on-year perspective, although full-year retail sales will likely fall by 15.0% in 2020.”