Singapore: High street looks under pressure – UOB

Barnabas Gan, Economist at UOB Group, reviewed the recent results from retail sales in Singapore.

Key Quotes

“Singapore retail sales plummeted 10.8% y/y (-4.5% m/m sa) in September 2020, down from a softer contraction of 5.7% y/y in the previous month. Excluding motor vehicles, retail sales fell by a larger margin of 12.7% y/y. Accounting for the latest data, Singapore’s retail sales contracted 19.1% y/y in the first three quarters of 2020, down from -2.4% y/y over the same period last year.”

“Importantly, September’s retail sales data reinforced our call that the initial domestic pent-up demand since the start of Phase Two has dissipated.”

“Sectors that continued to see positive year-on-year growth included sales in Supermarkets & Hypermarkets, Furniture & Household Equipment, and Recreational Goods.”

“Overall, September’s retail sales data, which contracted in both y/y and m/m sa terms, underline possible consumer fatigue. This is also considering that many clusters in the retail environment had seen pent-up demand in the previous three months at the start of Phase Two of Singapore’s re-opening.”

“Notwithstanding the disappointing September retail sales data, we maintain our view for Singapore’s retail sector to recover, albeit gradually. Singapore’s tourism industry is set to pick up slowly, led by the most recent in-principle agreement to establish a bilateral air travel bubble between Singapore and Hong Kong. On the flip side, the continued softening of Singapore’s labour market could in turn pressure domestic demand lower for the year ahead. As such, we keep our retail sales outlook at a full-year contraction of 15.0% in 2020.”