Estonian retail sales grew just 1% y/y in constant prices in September, according to data released by Statistics Estonia on October 31.
The reading shows the sector repeating the feeble growth rate seen in the previous two months, as well as in February, April, and May. Still, the July gain keeps retail sales on an expansion track that has run since mid-2013. In monthly terms, retail sales fell 6%, compared to a contraction of 2% m/m in August.
However feeble, retail sales growth in Estonia is fuelled by the tight labour market, as wages grew 6.8% y/y in the second quarter. With industrial output also growing steadily – at 4% y/y in September – the momentum appears to be there for GDP to continue robust growth in the coming quarters. GDP data for the third quarter is due on November 30.
The Estonian economy expanded 5.7% y/y in the second quarter, prompting Swedbank analysts to mull revising GDP projections for 2017 from the currently expected 3.5%. The outlook from the European Commission remains conservative at 2.3%, although there might be a revision when new outlooks come out from the EU executive this autumn.
The annual growth in retail sales came on the back of an 8% expansion in sales of manufactured goods, the same rate as in the annual growth in August. Within the segment, sales of textiles jumped 13% y/y, while sales of household goods and appliances, hardware and building materials grew 10% on the year.
Food sales fell 1% y/y in September – after falling 2% y/y the previous month – while sales of automotive fuel declined 9% y/y, which is 3pp slower than in August. Falling sales of fuel are linked to growing prices, Statistics Estonia noted.