RETAIL sales in March bounced back from a dip in February, surprising analysts with a stronger than expected performance as consumers snapped up more luxury items like cars and jewellery.
The retail sales index, which tracks retail spending, was 1.6 per cent higher in March than in February.
This easily beat the market consensus of a 0.2 per cent rise. It also reversed the 2 per cent month-on-month decline in February from January.
The gains were fuelled largely by vehicle sales expanding 4.8 per cent in March.
But Citi economist Kit Wei Zheng noted that sales volumes rose only 2.3 per cent from February, 'a discrepancy likely caused by the 14.8 per cent month-on-month surge in average COE premiums in February, which likely raised car prices in March'.
'Continued demand for cars despite climbing car prices likely stems from the frontloading of car buying ahead of planned vehicle population growth cuts.'
Even taking out vehicle sales, retail sales were 0.7 per cent higher than in the preceding month.
'Improving consumer sentiment and a surge in inbound tourist arrivals were behind strong sales of big-ticket items like watches and jewellery and electronic goods,' said Barclays Capital economist Leong Wai Ho.
Watches and jewellery posted the strongest gains in March, with sales receipts expanding 8.5 per cent from February. Telecommunications gear and computers notched up a 2.8 per cent month- on-month sales increase.
The strong growth in cars, watches and jewellery more than offset the more subdued showings for other items.
Sales of medical goods and toiletries fell 3.9 per cent, followed by sales of recreational goods, down 1.9 per cent.
Compared with March last year, retail sales were also up 9.1 per cent.
Though that was lower than February's 20.1 per cent year-on-year increase due to base effects, it still trumped analysts' estimate of 7.2 per cent.
The biggest contributor was car sales, which leapt 17.8 per cent. Petrol service stations' receipts were also pumped up 10.8 per cent. Telecommunications apparatus and computers' 11.3 per cent sales increase was the second highest.
The only drop year-on-year was in optical goods and books, which saw sales slide 3.2 per cent from March last year.
Economists said the March figures bode well for first-quarter output figures, which will be released tomorrow.
'Average first-quarter seasonally adjusted headline retail sales levels are now 2.1 per cent above average fourth-quarter levels... We expect private consumption to remain resilient,' Mr Kit said.
Mr Leong said the retail sales figures supported his earlier forecast that the preliminary growth estimate for first-quarter gross domestic product would be upgraded to 11 per cent quarter-on-quarter from the Trade and Industry Ministry's advance estimate of 9.9 per cent.