In May, Singapore’s retail sales experienced a year-on-year growth of 1.8%, a decline from the 3.7% growth reported in April, according to data from the Department of Statistics (SingStat). Month-on-month, seasonally adjusted retail sales fell by 0.2%, reversing the 0.5% growth seen in the previous month.

DBS economist Chua Han Teng indicated that retail sales growth has peaked, with the moderation reflecting less supportive base effects. OCBC chief economist Selena Ling noted that while international visitors to Singapore exceeded a million for three consecutive months in Q2, an increase in Singaporeans traveling abroad may counterbalance local retail spending.

The retail sales value for May reached S$4 billion, with online sales making up 11.8%. This figure surpassed April’s total of S$3.9 billion, despite slightly lower online sales contribution compared to the previous month. Excluding motor vehicles, retail sales still expanded by 1.8% compared to the previous year but dropped by 0.4% sequentially.

May marked the fourth consecutive month of year-on-year retail sales growth and 15 consecutive months of growth when excluding motor vehicles. Economists remain optimistic about future retail sales growth, primarily fueled by the ongoing recovery in tourism.

Despite the uncertainty surrounding a strong return of Chinese tourists, events like the Formula 1 and various concerts are expected to further boost retail sales. Economists anticipate that a significant influx of Chinese tourists could provide a considerable lift to retail sales in the latter half of 2023 or early 2024.

Alongside tourism, expectations of strong employment and wage growth in Singapore are likely to enhance domestic consumption. However, there are concerns about external economic pressures and rising inflation potentially limiting discretionary spending.

Most retail sales categories reported growth year-on-year, with exceptions noted in five of the 14 sectors, including department stores and petrol service stations. Food and beverage services grew by 8.5% year-on-year, although this was a decrease from the previous month’s 15.3% increase. Overall, the retail landscape appears stable, with expectations of gradual recovery supported by tourism and consumer spending.