By Gabriel Chen

RETAIL sales in April plunged the most in a decade as the economic crisis crunched consumer spending on items such as motor vehicles and computers.

There were some bright spots in the new numbers - jewellery, watches and other small-ticket items held up - but the overall picture was one of gathering gloom in the retail sector as unemployment rose and confidence sank.

The retail sales index slumped 11.7 per cent from a year ago, its worst showing since a 12.7 per cent fall in January 1999.

On a month-on-month basis, seasonally adjusted retail sales dropped by 3.1 per cent in April compared with the figure in March, mainly due to lower sales of big-ticket items like cars.

Motor vehicle sales - which comprise just over a third of the overall index - fell 10.2 per cent from sales in March, according to the Department of Statistics yesterday. Sales of telecommunication apparatus and computers in April also dropped by 12.1 per cent from sales in March.

If car sales were excluded, the index rose by 1.1 per cent in April over the figure in March.

The data also showed that in seasonally adjusted terms and after stripping out the effects of inflation, watch and jewellery sales rose 18.3 per cent in April over sales in March. Furniture and household equipment, food and beverages, optical goods and books, and medical goods and toiletries also recorded higher receipts in April.

'The hard data out of Singapore is painting a rather different picture from most other Asian countries,' said HSBC economist Robert Prior-Wandesforde, who cited the likes of China, South Korea and Indonesia as countries that are seeing healthier retail sales numbers. 'While the last two or three months have seen better industrial production and export figures, the same cannot be said of retail sales.'

Larger economies have not been spared the harsher retail environment.

Japan's retail sales dropped 2.9 per cent in April, falling for the eighth straight month as consumers held back due to concerns about jobs and wages.

While United States retail sales rose last month for the first time in three months, this was not down to a core rebound in spending, but was attributable to shoppers scoring bargains from cash- strapped carmakers.

The shrinkage in retail activity in Singapore comes at a time when the country is seeing fewer tourist arrivals, which is also weighing on retailers, hotels and restaurants.

The crisis has also forced companies to cut jobs and crimp wages. As people become more wary about their employment prospects, they hold back on spending.

'A further increase in job losses is expected in the next few quarters with a corresponding increase in unemployment, consumer sentiment should be kept weak, translating into lacklustre retail sales for most of this year,' said Standard Chartered Bank economist Alvin Liew.

The Ministry of Manpower underlined that sentiment yesterday with the announcement that employers cut 12,760 jobs in the first quarter, and that total employment contracted for the first time in almost six years.

The data also showed that nominal wages fell 3.7 per cent in the first quarter, the biggest decline in more than eight years.

Mr Prior-Wandesforde said that for now, it is really only the Government's Jobs Credit and training schemes that can help cushion the blow to employment. 'We suspect it will have some positive effect, but not enough to prevent the unemployment rate rising to between 4 per cent and 4.5 per cent by the end of this year.'

This article was first published in The Straits Times.