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From Accountingnet.ie In Business
Another strong month for car sales was the main driver behind a 1.8% monthly increase in the volume of total Irish retail sales in April. Sales volumes in businesses in the Motor Trade jumped by a further 5.9% in April to take the annual rate of increase to over 35%, according to the CSO. This is a dramatic turnaround from a year earlier when sales were plunging at an annual pace in excess of 50%, helped by the stimulus provided by the Government’s scrappage scheme, as well as some underlying recovery from extremely depressed levels. The recent strength of car sales has been well-documented of course. Indeed, industry sources point to another strong month in May which should feed through into next month’s report from the CSO. For this reason, our focus in recent releases of the retail sales report has been on trends in retailing outside the motor trades area. On an ex-motors basis, sales volumes recorded a small monthly decline of 0.2% in April. This was a slightly disappointing outcome as it followed three consecutive monthly increases. However, two considerations lead us to play down the significance of the slippage in April. First, there was a reasonably large upward revision to the previous months’ data, thus providing some offset to the news of a small fall in April. For example, the estimated level of sales in March is now actually 0.9% higher than that contained in last month’s report. This means that the quarterly increase in Q1 is now also higher, at 1.3% on these latest numbers vs. the 1.1% reported a month ago.
Second, even after the April decline, the momentum effect for the second quarter is positive. By this we mean that the level of sales in April is running above the Q1 average level - by about 1% in fact – thus suggesting that ex-motor trades retailing looks set to record a second quarterly increase. It is also worth highlighting that the April report shows the first year-on-year increase in ex-motors retail sales volumes since March 2008 – a significant improvement from the record decline of 8.9% recorded in May of last year. Our overall take on these latest numbers is that they are consistent with ongoing, if modest, improvement in underlying consumer spending trends. This is a pattern that has its origins in a gradual improvement in consumer confidence, which in turn is translating into less precautionary saving among Irish households as they sense that the overall economic environment is beginning to show improvement.
Simon Barry Chief Economist, Republic of Ireland Ulster Bank Capital Markets 3rd Floor Ulster Bank Group Centre George's Quay Dublin 2 Tel: +353 1 6431565 Fax: +353 1 6431672 Email: lynsey.clemenger@ulsterbankcm.com Website: www.ulsterbankcapitalmarkets.com
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