Irish retail figures remain strong despite monthly slump
figures released by the Central Statistics Office (CSO) yesterday revealed that retail sales in Ireland are growing steadily despite a degree of uncertainty surrounding the UK's decision to leave the EU.
Retail sales rose by 5.3pc on an annual basis, but declined by 5.8pc compared to May of this year.
The CSO noted that a significant drop in car sales accounted for a large proportion of the monthly fall.
The figures show sales in the retail sector contracted by the largest amount since 2011 on a month-to-month basis, but remain robust when compared to the same period in 2015.
The adjusted decline in retail sales fell to 1pc when the car sales measurement was removed.
Bar sales over the course of the year were up by 9.6pc, while sales of electrical goods rose by 8.5pc. Clothing and footwear sales showed a rise of 9.8pc compared to the same month last year, but declined by 2.5pc from the May figure. Sales in DIY slackened significantly in June, growing by just 1.6pc compared to growth of 18pc in May.
On a year-to-year basis,overall car sales rose by 14pc, offering a strong indication of the increased purchasing power currently being enjoyed by Irish consumers.
However analysts noted there is likely to be an eventual impact on some sectors stemming from the Brexit vote.
"Brexit will likely initially impact business investment in sectors exposed to slowing UK demand, with second round effects potentially affecting hiring decisions and household spending if the labour market were to slow significantly," Davy economist David McNamara said.
"Any negative impact may therefore not be felt until the turn of the year."
Consumer confidence hit a 15-year high in January but has dropped off in recent months, mainly on account of uncertainty surrounding the UK referendum.
Price deflation remains a feature of conditions on the Main Street, with figures for June revealing that prices had dropped by 2.3pc on a yearly basis. The first six months of 2016 have seen consistent declines in the price of consumer goods.
Commenting on the figures, Alan McQuaid, chief economist at Merrion Capital, said that the outlook for consumer spending will likely remain strong for the rest of the year.
"In overall terms, increased disposable income should lead to higher personal spending in 2016, as should the strong labour market. Even allowing for a slowdown in spending in the second half of 2016, we think that headline retail sales volume growth for the year as a whole will still be in the region of 6.5-7pc, albeit down from 8.2pc in 2015."
A spokesperson for the Irish Small and Medium Enterprises Association (ISME) said that increased participation in the workforce was assisting the overall growth in the retail sector.
"The continuing fall in unemployment and a rising population are very positive trends for retailers and should feed into stronger sales figures in the coming months as personal spending becomes more broad-based. The drop in sterling should also help general margins, although retailers along the border are in for a torrid time and Government needs to heed the warnings."
ISME stated that costs were rising for businesses as a result of higher wage demands from employees, adding that companies are still suffering from a lack of available credit.