Category Archives: Irish consumer confidence

28/8/15: Core Retail Sales for July: Less of a Cheer, More of a Smile

With much of hullabaloo around it, the Retail Sales figures for July were published today. The CSO headline on the matter read: "Retail Sales Volume increased by 11.6% in July 2015". Which is, of course, correct... to a point. The figure references sales inclusive of automotive sales. And it references volumes of sales.

So here are the actual retail sales figures, for retail sales excluding motors.

First, consider seasonally-adjusted sales allowing m/m comparatives:

  • Value of core (ex-motors) retail sales increased 0.3% m/m in July and this only partially (albeit substantially) corrects for 0.3% decline m/m in June. Compared to 2005 average level, value of sales today is only 1.09% higher, which is... before inflation is factored in. 3mo MA of Value indices in July was down 0.03% on 3mo MA average through June, while a month ago the same was 0.7% higher. In other words, there is nothing 'convincing' in the value of sales data. And this is concerning, because retailers don't get their revenues and profits from volumes of sales. They get them from value of sales.
  • Volume of retail sales (ex-motors) was up 0.64% m/m in July, having previously posted a decline of 0.12% in June. So July volumes of sales significantly over-compensated for June decline. Which is good news. Compared to 2005 average, July figure is 12.1% higher for the volume of sales, which means that deflation has resulted in more sales by volume, but barely any change in value: selling more stuff but getting less per unit sold is the retailers' margin nightmare and it has been going on for some years now. But the good news on Volume run out when you consider 3mo MA: 3mo MA through July was down 0.12% compared to 3mo MA through June, having previously been up 0.7%. So on 3mo MA basis (smoothing a bit volatility) value and volume of retail sales both fell in July.
  • Meanwhile, the never-ending exuberance of Irish consumers, as measured by Consumer Confidence Index posted some moderation in July, falling 3% m/m. Still Consumer Confidence in July 2015 is 97% (that's right - 97%) higher than the 2005 average. You really gotta wonder...
Two charts to illustrate the above trends:

As can be seen from the chart above, there is now divergence in the series for Value (rising slower) and Volume (rising faster) of core retail sales. This, with Value of sales running now persistently above the trend (suggesting risk of downward correction in the future), whilst Volume series running along the trend. Volume is converging with Consumer Confidence, while Value is diverging. Closer look at the latter next:

 And now to y/y data based on unadjusted series:

Per data charted above y/y changes were:

  • Value of core retail sales rose 3.40% y/y - which is a good performance, but not exactly stellar. In June, y/y increase was 2.0% and in July 2014 y/y rise was 1.2% which means this July growth was stronger. However, pre-crisis average y/y growth rate in Value of retail sales was 6.93% and this means that current rate of increase is just under 1/2 the rate of average rise in pre-crisis years. Smoothing out some volatility, 3mo average through July was 99.3 which is stronger than 3mo average through April 2015 (93.6) and is up 3% on 3mo average through July 2014. These are good figures, no arguing there.
  • Volume of retail sales, predictably, was up 6.7% y/y in July - double the rate of growth in Value of sales and above the pre-crisis average rate of growth of 6.2%. Volume of sales gained in July in annual rate of growth compared to June (4.7%) and compared to July 2014 (3.2%). And on 3mo average basis, the index was up 6% y/y for 3mo through July - double the rate of growth in Value.
  • Hence, overall we have the same picture in unadjusted data: rates of growth in Value of sales are healthy, but not spectacular, while rates of growth in Volume are strong. Volume is diverging from Value and there is nothing new here - it has been thus since the end of 2013.

Good news is that on 3mo average basis, May-July 2015 figures were

  • Positive in y/y terms for majority sub-sectors in value terms (excluding Food, Beverages & Tobacco and Motor Fuel) and for all sub-sectors in volume terms
  • The picture was a bit more fragmented for 3mo change through July compared to 3mo change through April, as shown in the table below.

Thus, overall, there are some good news in the retail sales figures. Do they warrant a huge wave of congratulatory backslapping exercises in the media? No. Do they warrant much of optimism that the sector is experiencing a big revival? Not exactly. 

30/5/15: Irish Retail Sales: April

Some good news on Irish retail sales side for April with latest CSO data showing seasonally adjusted core (ex-motors) sales up 2.65% m/m in April in Value terms to 100.6 index reading - the highest since September 2008. Remember - value series have been lagging far behind the volume series. April 2015 m/m increase comes after 0.31% contraction m/m in March and is a strong signal of a positive momentum returning to the sector.

Volume series continued to perform strongly, jumping 3.07% m/m in April after disappointing 0.65% drop in March. The series now stand at 110.7 which is the highest since July 2007.

Strengthening of the positive correlation between volume (and now also value) of core retail sales and Consumer Confidence indicator is also signalling that we are on an upward trend (remember, Consumer Confidence indicator is pretty useless in timing actual trend reversals, but performs pretty well in tracking trends). Still, rate of increase in consumer confidence indicator is out-pacing increases in retail sales on 3mo MA basis.

3mo MA for Value of core retail sales is up 0.95% compared to previous 3mo period and Volume series 3mo average is up 1.78%. Both series posted declines in 3mo average in March.

As the result of April changes, Value of core retail sales was up 3.16% y/y and Volume of retail sales was up 6.67% y/y - both strong indicators of a positive trend.

Couple of points of continued concern:

  • y/y increase in Value (+3.16% in April 2015) is slower than y/y growth rates posted in the series in April 2014 (4.4%) with Volume growth rates basically identical.
  • Compared to peak, 3mo average through April 2015 is down 40.6% for Value of sales and down 34.8% in Volume of sales, so there is still much to be done to restore the sector to full health.

On the net, however, the figures are healthy and strong, and very encouraging.

30/4/15: Consumer Confidence Boom in April… or Hopium by Pints

Ah, that slightly delirious Consumer Confidence data from Ireland keeps getting more and more delirious. April reading for the ESRI-compiled, KBC-sponsored, Consumer Confidence indicator was 98.7, up on 97.8 in March and the second highest reading since January 2005. The highest was in January 2015.

So now we have: on a 3mo average basis, 3 months through March, retail sales shrunk 0.2% in value terms and rose by 1.07% in volume terms. But in 3 months through April 2015 consumer confidence was up 5.7% (we have data lags here, so looking at latest data). And it gets worse: compared to January 1, 2015, retail sales by value are up 1.4%, down by 0.74% in volume, and consumer confidence is up 9.1%.

Hopium deliveries going strong nowadays...

29/4/15: Irish Retail Sales 1Q 2015

As I mentioned in a related post (, covering monthly data for Irish retail sales, last night, we can take a look at Q1 data comparatives for the sector based on 3mo averages for each corresponding quarter.

Here are the results y/y:

Good news is that overall only two sectors posted declines in Value of retail sales index in 1Q 2015 compared to 1Q 2014. These are both related to the decline in prices of fuel and wholesale prices declines for the Department Stores sales. All categories posted increases in volume of sales.

Large y/y increase in sales were recorded in 1Q 2015 in:

  • Motor Trades: up 22.7% in volume and up 20.6% in value of sales
  • 'Other sales': up 15.8% y/y in volume and up 6.8% in value
  • Books, newspapers, stationery & other: up 13.8% y/y in volume and up 5.7% in value
  • Household equipment: up 11.8% in volume and up 7.1% in value
  • Electrical goods up 11.8% in volume and 6.1% in value

As the result of this, Non food, ex-motors, auto fuel & bars sales rose 8.3% in volume and were up 3.6% in value terms compared to 1Q 2014. Food posted weaker sales growth at 4.2% y/y in volume and 2.3% in value.

Note: Retail Sales Activity Index is a simple average of Value and Volume indices

As chart above shows, in broader categories terms,

  • All Retail sales index of value of sales rose 6.1% y/y in 1Q 2015, while volume of sales index was up 9.9%. Strong showing driven heavily by the motor sales.
  • Core retails sales (ex-motors) were up 1.3% y/y in value terms and up 5.2% in volume terms in 1Q 2015.
  • Stripping out motors, automotive fuel and bars, retails sales rose 2.8% in value terms and were up 6.0% in volume terms. Again, strong showing over the quarter.

Chart below presents 1Q 2015 index reading against pre-crisis peak for 1Q period:

As the chart above clearly shows, the problem of weak retail sales, compared to pre-crisis levels, remains. Only three categories of sales have regained their pre-crisis peaks as of the end of 1Q 2015 in volume of sales terms. No category of sales has managed to regain pre-crisis peaks in value terms.

In discretionary spending categories terms, relating to normal consumption (stripping out auto fuel, food and motors), things remain under water in both volume of sales and value of sales terms. So things are getting better, but remain ugly in the sector.

The picture for 1Q 2015 is consistent with weak, but improving demand side in the economy.

This positive side of the National Accounts story is at risk, as it reflects deflationary environment where households are experiencing improved real incomes on stagnant wages and disposable nominal incomes. Any uptick in inflation can easily derail the recovery in the sector in terms of volumes of sales, if consumers start withdrawing their demand on foot of reduced opportunities for value shopping. Any uptick in inflation coupled with a rise in interest rates will present a double squeeze on consumer demand through reduced real incomes and reduced incomes available to fund consumption after housing and debt financing costs are taken into account.

28/4/15: Irish Retail Sales: March 2015

So the Spring Statement ( put quite an emphasis on domestic demand growth, while the retail sales data published today is not exactly encouraging.

Stripping out motor sales, and focusing on core retail sales:

  • Seasonally adjusted index for value of retail sales fell from 98.0 in February 2015 to 97.1 in March 2015. March reading is now the lowest  for 6 months and below the 3mo average (1Q 2015 average) of 97.7.
  • Seasonally-adjusted index for volume of retail sales also fell from 107.6 in February to 106.6 in March, posting the lowest reading in 4 months.
  • Meanwhile, Consumer Confidence indicator from the ESRI was up in March at 97.8 compared to February reading of 96.1.

Some more longer-range comparatives: in 4Q 2014, value index was up 0.2% compared to 3Q 2014, but in 1Q 2015 it was down 0.48% on 4Q 2014. In 4Q 2014, volume index was up 0.69% compared to 3Q 2014, but in 1Q 2015 it was down 0.25% on 4Q 2014. Again, as with monthly changes, 1Q 2015 3mo average for consumer confidence index was up 2.54% which is below 3.9% increase in the index for 4Q 2014 compared to 3Q 2014.

Looking at unadjusted series gives us year on year comparatives basis. So again, for core retail sales (ex-motors):

  • Value of retail sales was up 2.34% y/y in March 2015, having previously posted a 0.77% rise in February. A large chunk (just around 1/3rd) of March 2015 increase was down to March 2014 y/y drop of 0.77%. But 2/3rds of March 2015 rise were due to organic growth. Which is good.
  • Volume of retail sales rose robust 6.1% y/y in March 2015, having posted growth of 5.04% y/y in February.
  • On 3mo average basis, 1Q 2015 value index is at 91.2 which is up 1.3% y/y - again, good news, as value index performance has been weak due to weak prices. Volume 1Q 2015 index was up 5.2% y/y. As usual, Consumer Confidence broke the back of both retail sales indicators, rising 15.1% in 12 months through 1Q 2015.

Summary: People are hopping mad with confidence, buying rather more stuff in volume, but only on foot of finding value in prices. This is not too boisterous, but on the net not too bad either. Monthly trends are a bit more concerning with declines in both March figures and 1Q 2015 averages.

I will look at sectoral comparatives in the next post.