Retail sales see modest 2.3% growth in June

Sales growth driven by a strong YoY sales increase in motor vehicles.

Singapore’s retail sector grew by 2.3% year on year (YoY) in June, largely due to low base effects. The growth extends the 1.3% increase in May 2025.

Headline retail sales growth was driven by a strong 14.6% YoY increase in motor vehicle sales in June. Excluding motor vehicles, retail sales would have risen by a more modest 0.4% YoY.

According to UOB, retail sales remained soft in the first half of 2025, which was attributed to the tepid recovery in tourist arrivals that remained below pre-pandemic levels, particularly for Chinese tourists.

UOB also highlighted that the weakness in retail sales was likely exacerbated by a diversion of resident spending abroad during the June school holidays, further compounded by a strong SGD, with outbound air departures of Singapore residents exceeding 2019 levels.

Looking ahead, UOB economists expect retail sales to remain tepid for the rest of 2025 alongside a gradually cooling labour market.

Survey conducted by the Ministry of Manpower indicated a slight dip in the proportion of firms with plans to hire in Q3 2025 at 43.7% compared to Q2’s 44%, whilst the share of firms intending to raise wages also fell to 22.4% compared to Q2’s 24.4%.

This could result in slower wage growth in H2 2025, dampening discretionary spending.

UOB pointed out that measures such as the SG60 vouchers previously disbursed, as well as upcoming popular events like the Formula 1 Singapore Grand Prix in October and several concerts, could provide some support to retail activity.

eToro market analyst Zavier Wong noted that consumers are still spending, though with greater discretion.

“Essentials continue to hold up, while non-essential purchases, particularly in mid-range lifestyle categories, are being put off or reconsidered,” he said.

“To gauge how this shift plays out, regional platforms like Sea Ltd. and Grab Holdings offer useful indicators. Shopee’s Gross Merchandise Value and Grab’s delivery volumes reflect how everyday habits are evolving. If growth on these platforms starts to flatten, it may point to broader caution across the region - not just in e-commerce, but in dining, mobility, and lifestyle services,” Wong added.

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