Singapore Retail Sales Post Smallest Decline in Eight Months

By Shamim Adam

Oct. 15 (Bloomberg) -- Singapore’s retail sales dropped the least in eight months in August as the city state’s economic recovery spurred an improvement in spending at supermarkets and department stores.

The retail sales index dropped 5.2 percent from a year earlier after sliding 9.8 percent in July, the Statistics Department said today. The median estimate of six economists surveyed by Bloomberg News was for an 8.9 percent decline.

Singapore is emerging from its worst recession since independence in 1965 as global demand improves and the pace of job losses eases. The government has raised its 2009 economic forecast twice this year from an April prediction for a contraction of as much as 9 percent.

“Given the stabilized job market, retail sales should improve at a slow rate,” said Sebastien Barbe, a Hong-Kong based strategist at Calyon, the investment banking unit of France’s Credit Agricole SA. Sales “are likely to remain weak for a while before growth in exports and manufacturing spreads optimism to other sectors of the economy.”

Singapore’s economy is forecast to shrink 2 percent to 2.5 percent this year, the government said this week. That is better than a previous estimate for a contraction of as much as 6 percent.

Prime Minister Lee Hsien Loong this week announced the government will extend a wage subsidy program for employers that would have expired this year, to avoid an increase in job losses that may derail the economic recovery.

Job Vacancies

Employers cut 5,980 jobs in the three months ended June, compared with 12,760 in the first quarter, and the unemployment rate held at 3.3 percent as job vacancies rose for the first time after four quarters of declines, according to the Manpower Ministry.

Excluding motor vehicles, retail sales fell 3 percent in August from a year earlier, today’s report showed. Adjusted for seasonal factors, sales rose 5.2 percent from July.

Department-store sales grew 1 percent from a year earlier, and supermarket sales increased 4 percent. Purchases of telecommunications and computer equipment declined 14.7 percent. Vehicle sales fell 11.6 percent, while purchases at gas stations dropped 13.8 percent.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net