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<TABLE id=msgUN border=0 cellSpacing=3 cellPadding=0 width="100%"><TBODY><TR><TD id=msgUNsubj vAlign=top>
Coffeeshop Chit Chat - Confirmed: PAP BS about economy growth!</TD><TD id=msgunetc noWrap align=right> </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>kojakbt_89 <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>Aug-21 12:36 am </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 12) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>37805.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Aug 21, 2010
Economy's up but people not spending
Retail sales lag may be due to consumers' reluctance to splash out after the recession, flat wages growth
<!-- by line -->By Esther Teo
<!-- end by line -->
<!-- end left side bar --><!-- story content : start -->
http://www.straitstimes.com/Money/Story/STIStory_568988.html
THE economic recovery is roaring along at record pace but cash registers across the island have not been ringing as wildly as expected and economists are struggling to figure out why.
It may be reluctance on the part of still-nervy consumers to splash out after the recession, flat wages growth, or just that the realities on the ground have yet to catch up with the growth statistics.
The headline number has been the seasonally adjusted retail sales index, which has shown month-on-month contraction since February. The June retail figures were 0.7 per cent lower than May, according to the Department of Statistics.
Excluding motor vehicles - their sales are down after the Government released fewer certificates of entitlement - the index was mostly flat with an average 0.6 per cent month-on-month growth in the first half of the year.
The mediocre figures seem out of kilter with the Government's forecast of full-year economic growth of between 13 and 15 per cent.
Looking at year-on-year figures - again excluding motor vehicles - and the retail sales index has recorded positive growth throughout the first six months, partly due to the low base last year when the economic crisis hit.
Experts say that retail sales might have failed to keep up with the strong economic expansion figures because wage growth is lagging, with pay packets yet to catch the rebound fever.
(Kojakbt: Of course wat, when you have cheaper and younger FTs coming in and with no quotas for white collar jobs, there is no reason why employers need to raise salaries...)
DBS economist Irvin Seah said it might take some time for strong growth to filter down to consumers. He added that it was well-recognised that the labour market - and hence wage levels - often lagged up to two quarters behind gross domestic product growth.
But the labour market had picked up more quickly this time around compared with the last downturn, thanks in part to various government schemes to save jobs.
'However, while we have seen wages rise in more specific segments such as finance, the growth in wages has not been broad-based as yet,' he said.
OCBC economist Selena Ling said retail sales usually moved in tandem with the positive sentiment that economic growth created, and any lag would be slight. She described the retail situation as 'strange' and said it could be due to more global shoppers. With budget airlines making travelling abroad affordable, buying patterns may have shifted abroad.
Citigroup economist Kit Wei Zheng said economic growth might have been exaggerated by the biomedical sector. This grew at a blistering 70 per cent in the first half compared with the same period last year due to the production of higher-value-added drugs.
And this growth does not generally translate into more jobs. 'The sector is more capital rather than labour intensive... this may not translate to the same extent to swings in actual economic welfare on the ground.'
With strong home sales, a substitution effect might have also occurred where spending on a big-ticket item offset spending in other areas, Mr Kit added.
Other data painted a different picture. CIMB economist Song Seng Wun cited MasterCard's report of a 28 per cent increase in spending during the Great Singapore Sale compared with last year. He said the retail sales index could be tracking spending in a different way since it was unclear how the data was collected.
Based on the retail sales index, it has been a mixed bag for the retail sector this year. Sales of telecommunications apparatus and computers, apparel and footwear and food and beverages were among the worst performers, while watches and jewellery performed better, likely due to strong tourism numbers.
Watch retailer The Hour Glass said in its first quarter financial statement that while sentiment has improved over the last year, consumers remain cautious due to the uncertainty of the global recovery.
Isetan (Singapore) also said in its second quarter results that the strong economic recovery had not resulted in a similar trend in consumer spending at its stores. 'Following this recovery, it will take time for consumer confidence and spending to return. Until then, competition for the consumer dollar will remain keen and retailers will have to monitor their costs closely,' it said.
Singapore Retailers Association president Jannie Tay said that sales this month are gradually picking up and are expected to hold steady. Consumers remain concerned over the economic recovery in the United States and are not over-excited about spending, she said, adding: 'We expect to at least maintain last year's sales, but costs have gone up so our bottom line might become slimmer.'
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Economy's up but people not spending
Retail sales lag may be due to consumers' reluctance to splash out after the recession, flat wages growth
<!-- by line -->By Esther Teo
<!-- end by line -->
<!-- end left side bar --><!-- story content : start -->
http://www.straitstimes.com/Money/Story/STIStory_568988.html
THE economic recovery is roaring along at record pace but cash registers across the island have not been ringing as wildly as expected and economists are struggling to figure out why.
It may be reluctance on the part of still-nervy consumers to splash out after the recession, flat wages growth, or just that the realities on the ground have yet to catch up with the growth statistics.
The headline number has been the seasonally adjusted retail sales index, which has shown month-on-month contraction since February. The June retail figures were 0.7 per cent lower than May, according to the Department of Statistics.
Excluding motor vehicles - their sales are down after the Government released fewer certificates of entitlement - the index was mostly flat with an average 0.6 per cent month-on-month growth in the first half of the year.
The mediocre figures seem out of kilter with the Government's forecast of full-year economic growth of between 13 and 15 per cent.
Looking at year-on-year figures - again excluding motor vehicles - and the retail sales index has recorded positive growth throughout the first six months, partly due to the low base last year when the economic crisis hit.
Experts say that retail sales might have failed to keep up with the strong economic expansion figures because wage growth is lagging, with pay packets yet to catch the rebound fever.
(Kojakbt: Of course wat, when you have cheaper and younger FTs coming in and with no quotas for white collar jobs, there is no reason why employers need to raise salaries...)
DBS economist Irvin Seah said it might take some time for strong growth to filter down to consumers. He added that it was well-recognised that the labour market - and hence wage levels - often lagged up to two quarters behind gross domestic product growth.
But the labour market had picked up more quickly this time around compared with the last downturn, thanks in part to various government schemes to save jobs.
'However, while we have seen wages rise in more specific segments such as finance, the growth in wages has not been broad-based as yet,' he said.
OCBC economist Selena Ling said retail sales usually moved in tandem with the positive sentiment that economic growth created, and any lag would be slight. She described the retail situation as 'strange' and said it could be due to more global shoppers. With budget airlines making travelling abroad affordable, buying patterns may have shifted abroad.
Citigroup economist Kit Wei Zheng said economic growth might have been exaggerated by the biomedical sector. This grew at a blistering 70 per cent in the first half compared with the same period last year due to the production of higher-value-added drugs.
And this growth does not generally translate into more jobs. 'The sector is more capital rather than labour intensive... this may not translate to the same extent to swings in actual economic welfare on the ground.'
With strong home sales, a substitution effect might have also occurred where spending on a big-ticket item offset spending in other areas, Mr Kit added.
Other data painted a different picture. CIMB economist Song Seng Wun cited MasterCard's report of a 28 per cent increase in spending during the Great Singapore Sale compared with last year. He said the retail sales index could be tracking spending in a different way since it was unclear how the data was collected.
Based on the retail sales index, it has been a mixed bag for the retail sector this year. Sales of telecommunications apparatus and computers, apparel and footwear and food and beverages were among the worst performers, while watches and jewellery performed better, likely due to strong tourism numbers.
Watch retailer The Hour Glass said in its first quarter financial statement that while sentiment has improved over the last year, consumers remain cautious due to the uncertainty of the global recovery.
Isetan (Singapore) also said in its second quarter results that the strong economic recovery had not resulted in a similar trend in consumer spending at its stores. 'Following this recovery, it will take time for consumer confidence and spending to return. Until then, competition for the consumer dollar will remain keen and retailers will have to monitor their costs closely,' it said.
Singapore Retailers Association president Jannie Tay said that sales this month are gradually picking up and are expected to hold steady. Consumers remain concerned over the economic recovery in the United States and are not over-excited about spending, she said, adding: 'We expect to at least maintain last year's sales, but costs have gone up so our bottom line might become slimmer.'
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