In the previous post I looked at the Retail Sales dynamics from the point of view of whether September and Q3 2012 data show any really exciting change in trend to warrant exceptionally upbeat headlines. There were, basically, none.
But what about all the 'sales increases' rumored and even discussed in the analysts' reports?
Let's take at annual growth rates for Q3 by broad categories of sales:
And the same applies for Volume of sales:
Now, let's take a look at each category individually:
- Books, Newspapers, Stationery & Other Goods: down 4.8% in Value and down 4.5% in Volume y/y in September, down 4.5% y/y in Q3 2012 in Value and down 4.3% y/y in Q3 2012 in Volume. No good news here.
- Hardware, Paints and Glass: down 3.8% y/y in Value and down 4.3% y/y in Volume in September 2012, also down 4.8% in Value and 5.3% in Volume for Q3 2012 compared to Q3 2011. No good news here.
- Other Retail Sales: down 3.3% in Value and down 3.1% in Volume, same down 4.2% in Q3 2012 y/y in Value and down 3.8% in Volume. No good news here.
- Furniture & Lighting: down 2.3% in Value and up 2% in Volume in September in y/y terms, which means that the sector is trading down on revenues amidst a deflation. In Q3 terms relative to Q3 2011: the sector is down 3% in Value and up 0.8% in Volume - again, deflation and falling revenues. I wouldn't call this a good news.
- Clothing, Footware and Textiles: down 1.7% in Value and down 0.6% in Volume in September, down 2.3% in Value and 1.4% in Volume in Q3 2012. No good news anywhere here.
- Food, beverages & Tobacco: down 0.3% in Value in September and down 0.9% in Volume. In Q3 terms the sector is down 0.9% and 1.5% in Value and Volume respectively. All signs are, therefore, flashing red. Alongside the trends in Food and Beverages (below), the above suggest significant contraction in legal sales of tobacco, possibly due to increased tax evasion and smuggling.
- Household Equipment: up 0.8% in Value and 5.6% in Volume, which means that deflation is erasing some 86% of the revenues out of the increased activity. In Q3 2011-Q3 2012 terms, the sector is up 0.1% in Value and up 5% in Volume. In effect, revenues standing still, while volumes of activity rising. Last time I checked, the revenues pay for staff, while volume sales pay for warehouses.
- Pharmaceuticals, Medical & Cosmetic Articles: the less elastic in demand category of goods saw September sales rise 1.2% in Value and 2.7% in Volume, while Q3 sales saw increases of 1.2% in Value and 2.3% in Volume. This is a sector that did well out the recent data both in terms of value and volume of sales rising. All of these sales are, however imports.
- Motors and Fuel sales rose 2.9% in Value and fell 0.5% in Volume in September. Q3 change y/y was -1.1% in Value and -4.1% in Volume. Here's an interesting thing: Fuel sales - the coincident indicator for economic activity - were up 3.5% in Value and down 5% in Volume in Q3 y/y, which means that once we strip the inflation (which goes to fund Irish Government and foreign producers at the expense of the real economy here), the sales are down and this does not bode well for Q3 economic activity.
- Food business: is booming, rising 3.8% in value and 2.4% in Volume (suggesting inflation in food sector) in September, rising 3.1% in Value and 1.9% in Volume (confirming inflation) in Q3 2012 y/y. Now, food sales, especially in rainy July-August, could be strongly influenced by people staying at home. The same is true for the expected effects of reduced travel during summer months as fewer of us can afford trips out of Ireland and those who still can taking shorter breaks.
- Bars had a cracking September on foot of a number of higher profile events - rising 3.9% in Value and 2.3% in Volume. However, Q3 figure confirms what is suggested by the food sector performance (above): sales are down 1.9% in Q3 y/y in Value and down 3.4% in Volume. In other words, controlling for one-offs, there is no good news in the sector.
- Lastly, Electrical Goods. Given the switch to digital TV this month, it can be expected that sales were up 5.5% in Value and 11.2% in Volume in September, while Q3 figures were up 6.7% in Value and 12.7% in Volume. Interestingly, these sales rose 4.9% y/y in Value in Q2 2012 and 11.3% in Volume. But in Q1 the same sales were down 5.3% y/y in Value and up only 1.6% y/y in Volume. Overall, during the Great Recession the sector did better than any other sector: in Q3 2012 the index for the Value of Sales in the sector stood at 76.3 (100=2005), which is the fourth highest in the overall sectors categories. For the Volume of sales, index stood at 141.1 - the best performance by far of all sectors.
So the key summary: Non-food retail sales excluding motor trades, fuel and bars: down 0.6% in Value and up 1.5% in Volume in September - aka deflation and falling revenues. In Q3 2012 compared to Q3 2011: down 0.7% in Value and up 1% in Volume - again, deflation and shrinking revenues. Care to suggest this is 'good'? It is better than outright y/y drop of 3.3% in Q2 2012 in Value and a decline of 1.6% in Volume, and better than -5.6% in Value and -4.3% in Volume recorded in Q1 2012, but it is comparable in Value terms to Q4 2011 (down 0.6% y/y), although still better in Volume terms (-0.7% y/y).
Still, getting worse at a slower rate is not equivalent to getting better. And it is most certainly not a 'solid retail sales in Q3' result that is being claimed by some analysts.