Booming Irish retail sales add to string of strong data

Irish retail sales volumes rose 9.9 percent year-on-year in July, data showed on Friday, capping a week of strong job, house price and wage figures that indicated there was little prospect of the economic recovery abating. After growing by over 5 percent in 2014, Ireland's economy is set to be the best performing in Europe again this year as the country rebounds from a debt crisis that saw it follow Greece into an international bailout less than five years ago.
Retail sales snapped two months of declines after consumers rushed to buy cars with new registrations pushing sales across all sectors up 11.6 percent on the month. More new cars were sold in the first seven months than in the whole of 2014. Excluding car sales, volumes were up 6.6 percent year-on-year with annual rises in 12 of the 13 sectors. "Although retail sales remain erratic on a monthly basis, the underlying trend is positive," said Alan McQuaid, chief economist at Merrion Stockbrokers.
"Personal spending in other areas is starting to pick up too and is becoming more broad-based. This can only be good news for retailers and employers." Earlier this week, unemployment fell to a fresh six-year low of 9.5 percent, growth in property prices hit a four-month high after three months of consecutive falls and net emigration almost halved. Young people leaving in search of work was one of the hardest felt aspects of a crisis that pushed unemployment above 15 percent in 2012 and while Irish emigrants appear to be still reluctant to return home, fewer are leaving and Ireland is becoming an attractive location for foreign workers again.
The data has been backed up by positive results this month from banks to builders and also reflected in earnings data that showed wage growth up 1.8 percent year-on-year, driven by the private sector where pay in the booming technology insustry has now risen by almost 17 percent since 2010. "A key feature of Ireland's recovery that has been missing has been positive earnings growth. Falling wages have led to deflationary pressures, forcing Irish consumers to maintain exceptionally high savings rates to reduce their debts," Davy chief economist Conall Mac Coille said. "The emergence of positive wage growth is also extremely important for investors in the Irish economy. It will allow house prices to rise over the medium-term without stretching affordability and facilitate nominal growth in bank lending."