• Distributive trade sales fell for the fourth straight month, but at a smaller contraction in June (-8.4%; May: -23.8%)
  • Attributable to the resumption of economic activities under the Recovery Movement Control Order (RMCO), which started on 10 June.
  • MoM: expanded sharply for the second successive month (21.8%; May: 26.3%), reflecting a continued domestic recovery.
  • 2Q20: fell sharply (-22.6%; 1Q20: 1.6%) due to the impact of the Movement Control Order following the COVID-19 outbreak.
• The improved performance was broad-based, steered mainly by the sales of motor vehicles, retail and wholesale trade
  • Retail trade: softer contraction (-9.2%; May: -16.1%) due to a smaller decline in sales of others in specialised store and household equipment as more businesses were allowed to resume operations.
  • Motor vehicles: dropped by less (-4.5%; May: -49.5%) as sales of vehicles, maintenance and repair, rebounded almost matching pre-pandemic level.
  • Wholesale trade: smaller drop (-8.7%; May: -23.6%) due to less decline in sales of other specialised and household goods.
• Improved retail trade performance in the region
  • JP: fell for the fourth straight month (-1.3%; May: -12.4%) but at a smaller contraction amid persistence weakness in spending of general merchandise and big-ticket items.
  • SG: contraction eased (-27.8%; May: -52.0%) on the back of the gradual economic reopening, as Singapore entered phase one on 2 June and phase two on 19 June.
• 2020 distributive trade sales forecast retained (-1.5% to -2.5%; 2019: 5.9%)
  • In spite of MoM double digit growth rebound in May and June, and supported by the larger economic stimulus package, the recovery pace is expected to be weighed by persisting COVID-19 rising infection fears.
  • Therefore, we maintain our private consumption forecast to moderate sharply to 1.5% in 2Q20 (1Q20: 6.7%), weighing overall 2Q20 GDP growth (-7.5%; 1Q20: 0.7%). Nevertheless, growth is expected to recover gradually, possibly registering a softer contraction in 3Q20 (-4.5%) on the impact of ongoing fiscal stimulus and monetary easing.

Source: Kenanga Research - 11 Aug 2020