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Singapore retail sales plunge most in decade

(Agencies)
Updated: 2009-06-15 16:28

SINGAPORE -- Singapore retail sales suffered their biggest drop since 1999 as shoppers cut back on big-ticket items such as cars and furniture amid the city-state's worst ever recession.

The statistics department said Monday that retail sales fell 11.7 percent from a year earlier after dropping 7.3 percent in March and 5.5 percent in February.

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The government also said it slightly revised up its first quarter unemployment rate to 3.3 percent from 3.2 percent initially reported in April. The jobless rate was 2.5 percent in December.

"The weakness in consumption initially reflected a shock to confidence, but personal incomes are now suffering as well," said Robert Prior Wandesforde, senior Asia economist with HSBC.

Singapore expects its economy to shrink up to 9 percent this year, which would be its worst contraction since splitting from Malaysia in 1965. The recession, which began in the second quarter of last year as exports plunged, has started to eat away at jobs and hurt consumer confidence.

The April retail sales numbers are also a bad omen for second quarter gross domestic product growth. Singapore's GDP plunged a seasonally adjusted, annualized 14.6 percent in the first quarter from the previous quarter, following a 16.4 percent drop in the fourth quarter.

The unemployment rate will likely rise, further undermining consumer demand, Morgan Stanley said in a report Monday.

Many of the new jobs recently created by projects in the pharmaceuticals, chemicals, retail and hotel sectors were from investments laid out years ago, and fresh capital outlays are slowing, it said.

"Job losses could soon catch up when the capital expenditure recession invariably intensifies and consumer strength is likely to stay subdued in 2010," the report said.

Morgan Stanley said it expects Singapore's economy to shrink 10 percent this year and grow 3 percent next year.

Sales of motor vehicles fell 28 percent, furniture and household equipment dropped 11 percent, and apparel and footwear slid 6.1 percent, the department said in a statement.

Sales fell a seasonally adjusted 3.1 percent from March.