UPDATE 1-Irish retailers see holiday sales making up for Nov dip

Mon Jan 7, 2013 7:24am EST

* Retail sales end strong run with 1.1 pct monthly Nov fall

* Holiday sales strong, retailers predict 2.5 pct Dec growth

* Positive end to the year to boost GDP growth-economists

By Padraic Halpin

DUBLIN, Jan 7 (Reuters) - Irish retail sales volumes fell on a monthly basis for the first time in five months in November but traders entered 2013 with cautious optimism after reporting their busiest Christmas period since the financial crisis began.

While Ireland has avoided a return to recession compared with much of the euro zone, its mild economic growth has been built on a robust export sector with the domestic economy still struggling with high unemployment and austerity.

Retail sales volumes, which have fallen for four consecutive years and collapsed by 18 percent in 2009, dropped 1.1 percent on the month in November, provisional data showed on Monday.

However unlike other euro zone strugglers who saw the bloc's debt crisis batter holiday sales prospects, retailers in Ireland said the key shopping period had been kinder to them due to mild weather and less uncertainty among customers.

"In December, we were a little over 5 percent ahead on last year and generally the store performed well across the board, which is a relief," Nigel Blow, chief executive at Arnotts, Ireland's oldest and largest department store, told Reuters.

"We've definitely seen business strengthen in the second half of the year to the point that we're seeing modest growth quite consistently year-on-year. I think you'd struggle to find a retailer bold enough to say the tide's turned but things are moving in the right direction."

Retail Excellence Ireland, the country's largest retail industry body, said that activity picked up after the government announced its latest budget on Dec. 5, with trading during the post-Christmas sales up around 5 percent on the previous year.

Based on feedback from its members, it predicted that retail sales would increase by between 2 and 2.5 percent year-on-year in December and that less challenging comparatives in the early part of 2013 would likely help boost sales in the first quarter.

The body's chief executive David Fitzsimons said electronic goods were the big winner in the sales with one large retailer seeing a 1,000 percent increase in the sale tablet computers, a positive after Monday's data saw monthly sales of electrical goods fall 18 percent month-on-month in November.

However that came after an even larger monthly increase in October, driven by television sales following the switch-off of analogue terrestrial broadcasting, and electrical goods sales were up 4.8 percent year-on-year in November.

Volumes overall were 0.5 percent lower on an annual basis and economists polled by Reuters expected that retail sales fell by one percent for the year as a whole in 2012.

"Although the overall retail sales figures for November were a bit weaker than we expected, there was always the feeling that there would be a lull in spending ahead of the mad December rush for the Christmas festive season," said Alan McQuaid, economist at Merrion Stockbrokers.

"All in all, it now looks the fall in personal expenditure in goods and services for 2012 won't be as weak as originally thought, which will increase the chances of GDP growth coming in at 1 percent or above for the second year running."