● September’s distributive trade sales softened to a five-month low (5.6%; Aug: 5.8%)

- MoM: first contraction in five months (-3.0%; Aug: 1.4%).

- 3Q19: eased to a 13-quarter low (5.7%; 2Q19: 6.1%), dragged by weaker performance of motor vehicles sales (0.1%; 2Q19: 0.3%) and retail trade (2.8%; 2Q19: 3.0%), in line with our forecast of a more moderate economic expansion in 3Q19 (4.4%; 2Q19: 4.9%).

● Moderation in wholesale trade outweighed improved motor vehicles sales and retail trade

- Wholesale trade: slowed to near three-year low growth (4.7%; Aug: 6.0%) on declining sales of agricultural raw materials & live animals and slower growth in sales of food, beverages & tobacco.

- Motor vehicles: rebounded to 4.4% (Aug: 1.1%), reflecting the absence of high base effect arising from the spike in car sales following the tax holiday last year.

- Retail trade: edged up (7.2%; Aug: 6.9%), but to remain relatively soft, in line with the MIER consumer sentiment index which drifted further below the 100-point confidence threshold for 3Q19 (84 points; 2Q119: 93 points).

● Mixed retail trade performance across advanced and developing economies

- EA: increased marginally (3.0%; Aug: 2.9%) suggesting resilient private consumption despite downturn in its manufacturing sector

- JP: spiked to 9.1% (Aug: 1.8%) as consumers rushed their purchases ahead of the planned sales tax hike in October.

- SG: tenth straight month of contraction (-1.1%; Aug: -1.1%) reflecting cautious consumers against the backdrop of economic slowdown.

● Projection for distributive trade sales in 2019 maintained at 6.5-7.5% (2018: 8.2%)

- Concerns over global economic slowdown and looming external uncertainties arising from trade disputes amongst multiple nations to weigh on domestic demand.

- Distributive trade sales to chart slight improvement in the final quarter as high base effect disappears.

- Private consumption to soften to 6.7% in 3Q19 (2Q19: 7.8%), dragging the GDP growth to 4.4% (2Q19: 4.9%).

Source: Kenanga Research - 13 Nov 2019