SINGAPORE (Nikkei Markets) -- Retail sales in Singapore staged a surprise rebound in April even as online spending continued to grow, signaling improving consumer sentiment in a recovering economy.
Data released by the Department of Statistics on Monday showed retail sales, excluding motor vehicles, rose 4.9% in April from a year ago, led by increased sales of watches and jewelry and as department stores and petrol stations reported better performances.
The rise was much stronger than the 0.5% increase in March and a marked improvement over the first quarter, when retail sales fell 0.4% from a year ago.
Including sales of motor vehicles, which fell 6.4% year-on-year, Singapore retail sales rose 2.6% in April from a year ago.
However, restaurants in the city-state continued to face strong headwinds, with sales falling 10.5% from a year ago, according to a food and beverage services index compiled by SingStat. The decline was similar to the pace in the first three months of 2017.
Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp, Singapore's second-largest lender, said April's retail sales suggest that "some pockets of discretionary spending had picked up with the improvement in consumer sentiment."
Economists exclude motor vehicles when analyzing the retail sector as the number of cars sold in Singapore is determined by government quotas aimed at managing traffic congestion.
Singapore's retail sector has been hit by tepid sales in recent years due to slow economic growth and as consumers switch to online sites run by overseas companies such as Amazon and China's Alibaba Group.
CapitaLand Mall Trust, Singapore's largest retail landlord, said recently that shopper traffic at its malls fell 0.5% in the first quarter from a year ago, while tenant sales per square foot dropped 0.7%. CMT is managed by an independent unit of CapitaLand Ltd., Southeast Asia's largest developer by assets.
The weakness in retail spending has hurt landlords, with data from the Urban Redevelopment Authority showing retail rents fell 2.9% quarter-on-quarter in the first three months of 2017. Malls are now dotted with empty spaces as the vacancy rate rose to 7.7% in the first quarter from 7.5% in the preceding period.
Chua Hak Bin, an economist at securities firm Maybank Kim Eng, said consumer sentiment in Singapore could not be gauged by looking only at retail sales data, as purchases made online may not be fully captured by authorities here due to the difficulty in getting information from foreign e-commerce websites.
Overseas sites accounted for 60% of online sales, based on a 2014 report, and the share is probably higher today, he added.
Payments company Visa International told Nikkei Markets that e-commerce transactions now account for nearly a quarter of total spending on Visa cards, more than double the 10% seen around five years ago.
The rise in online spending was even faster at smaller rival UnionPay, which said its cardholders in Singapore spent over six times more in the first four months of 2017 compared to the same period last year.
UnionPay said the spike in online spending was partly driven by joint promotions held with companies such as Singapore Airlines and Chinese online travel agency Ctrip, and as more merchants accept its cards.
"We have also seen the rise of on-demand services and in-app wallets, which contributes to e-commerce spend," said Ooi Huey Tyng, Visa's country manager for Singapore and Brunei.
Credit card billings in Singapore have grown by high single-digits in recent months, in contrast to official retail sales which have been flat when vehicles are excluded.
"With many brick-and-mortar retailers increasingly embracing the e-commerce route, I expect that credit card transactions and volumes for the e-channel will continue to grow," said OCBC's Ling.
Singapore said last month its economy is likely to grow by more than 2% in 2017, a forecast that puts the trade-dependent city-state on course to achieving its fastest expansion in three years.
--Kevin Lim
