Taipei--A mild pace of growth in the local retail sector in May showed the momentum of local private consumption was capped, partly due to low wages and the drop in Chinese tourists, according to the Ministry of Economic Affairs (MOEA).
Last month, the local retail sector underperformed the wholesale and restaurant/food/ beverage sectors in terms of revenue, which served as evidence that the effects of a recovering local economy has not trickled down enough to consumers and has failed to prompt them to spend more, Wang Shu-chuan (???), deputy director of the MOEA's statistics department, said on Friday.
In May, sales posted by the local retail sector rose 1.0 percent from a year earlier to NT$338.5 billion (US$11.13 billion), while revenue generated by the local wholesale sector and the restaurant/food/food sector grew 3.5 percent and 2.7 percent, respectively, to NT$805.2 billion and NT$38.5 billion, the MOEA data showed.
Wang said that the wholesale sector has been highly correlated to an improvement of Taiwan's outbound sales. They reflect the increase in exports; companies, including overseas firms, have been buying more wholesale supplies.
Solid global demand has boosted Taiwan's exports, which account for about 60 percent of the country's gross domestic product (GDP). As a result, the Directorate-General of Budget, Accounting and Statistics has raised its forecast of Taiwan's GDP growth for 2017 to 2.05 percent from 1.92 percent.
But the retail sector -- which reflects spending by ordinary consumers -- has been affected by stagnant wage growth in the local market.
In the first five months of this year, local retail sales even fell 0.1 percent from a year earlier to NT$1.67 trillion, while revenue posted by the wholesale sector and the restaurant/food/beverage sector rose 4.8 percent and 3.3 percent, respectively, to NT$3.93 trillion and NT$188.7 billion.
Wang said that the warm weather in the first quarter also compromised sales of the fashion business, as fewer people bought warm clothing. Meanwhile auto and motorcycle sales in the March-April period slowed. Wang added that the drop in Chinese visitors to Taiwan also contributed to weaker retail sales.
The MOEA data showed that while sales posted by department stores, supermarkets, and convenience stores for May rose 4.8 percent, 7.6 percent and 3.7 percent, respectively, from a year earlier on the back of promotion campaigns for the Mother's Day, revenue posted by information communications technology device and home appliance retailers fell 4.8 percent year-on-year.
Sales of home improvement equipment also dropped 5.1 percent year-on-year in May, the data indicated.
That month, sales of the local wholesale sector were generally driven higher by global demand for electronics devices such as flat panels, memory chips and servers, while rising steel products also helped the sector rake in more revenue, the MOEA said.
As for the restaurant/food/beverage sector, the MOEA said, Mother's Day and the Dragon Boat Festival holiday of May 27-30 led more and more consumers to dine out to boost their revenue, the MOEA said.
Looking ahead, Wang said, retail sales could stay flat year-on-year in June due to slow season effects, but sales in the wholesale sector and the restaurant/food/beverage sector will continue to grow by 2.6 percent and 2.8 percent, respectively, from a year earlier.
Source: Focus Taiwan News Channel