3 factors poised to lift retail sales into Q1 2025

In September, retail sales grew by 2% YoY.

Experts anticipate retail sales growth to extend into Q4 and Q1 2025, citing three factors backing this projection.

In a report, RHB said a resilient global backdrop, upcoming festive periods and year-end holidays, and a healthy labour market in the medium term will support retail growth.

"We expect Singapore to see a resilient GDP prognosis from a sanguine global trade and investment outlook. The global macroeconomic backdrop should support Singapore's growth in Q4 2024. Meanwhile, the travel-related cluster will continue to see above-trend growth, supported by the ongoing recovery in international travel," RHB said.

"Based on our global economic outlook, we remain optimistic about ASEAN's external environment in Q4 2024, which should also benefit from the recent monetary and fiscal policy spurs from China," RHB added.

Meanwhile, RHB expects business conditions in the F&B service and retail industries to improve in Q4 and Q1, spurred by the holiday seasons, including Christmas, Chinese New Year, and school holidays.

"Tourism-related sectors are set to benefit from a rise in Chinese tourists during China's Golden Week, marking a key recovery in inbound tourism, particularly to ASEAN countries," RHB said.

In a separate report, UOB said the boost from discretionary spending during the festive season on retail sales could be limited as residents may spend abroad during the school holidays, driven by a strong SGD, especially against the Japanese Yen and Korean Won.

Q4 will also likely see a growth in Singapore's labour demand, RHB said.

"We believe demand for labour, particularly in the services sector, will remain strong due to the upcoming year-end festive season and the positive growth outlook for 2025 despite surveys suggesting a decline in hiring and wage expectations," RHB said.

"Strong labour demand in Singapore, especially in manufacturing and services, will boost retail sector growth by increasing disposable income and consumer confidence. Higher employment and wages will drive demand for essential and discretionary goods, leading to sustained retail activity, particularly in food services and non-essential retail, with more foot traffic during peak periods," RHB added.

Meanwhile, UOB said retail sales could benefit from major events like sports, concerts, and BTMICE activities, along with a further boost from the government’s Assurance Package cash handouts in December 2024.