(Adds analysts, business survey)
By Jonathan Saul
DUBLIN, Dec 17 (Reuters) - Ireland's retail sales registered the biggest year-on-year drop in over 24 years in October, showing a deepening recession, shattered consumer confidence and job worries taking their toll.
Ireland was the first euro zone economy to slide into recession earlier this year in its first contraction in a quarter century, due to a bursting property bubble and the global credit crunch.
The volume of retail sales fell 0.6 percent in October, to stand percent 7.3 percent lower than a year earlier, the biggest annual drop since February 1984, provisional data showed on Wednesday.
Excluding motor trades, the year-on-year decrease was the largest since April 1975, the Central Statistics Office said.
"The latest retail sales figures highlight the ongoing reluctance of Irish consumers to spend, bad news in the run up to the important Christmas retailing period, and a trend which is set to continue well into 2009," said Lynsey Clemenger, economist with Ulster Bank. The government predicted last week the economy would shrink by between 3 to 4 percent next year, making it the country's worst recession on record.
Finance Minister Brian Lenihan said unemployment was estimated to head up towards 9 to 10 percent, which would mean its highest rate in over a decade.
"Households are increasing their precautionary savings as the labour market continues to deteriorate," said National Irish Bank chief economist Ronnie O'Toole.
Economists expect retail sales to fall 3.8 percent this year compared with a 6.4 percent rise in 2007, according to a Reuters poll of economists published last month. Retail sales are expected to fall 4.2 percent in 2009, the survey showed.
"People are saving more because they are worried in part by future job prospects," said Davy chief economist Rossa White "But they are also saving more due to the big hit on personal wealth over the last year."
A quarterly survey by Ireland's small and medium business group ISME on Wednesday added to the gloom.
"In all areas there has been a sharp deterioration in the last quarter, with jobs in the sector imploding, sales plummeting, investment non-existent, exports falling through the floor and confidence at an all-time low," said ISME's head of research Jim Curran.
"Unfortunately the indicators are that things are going to get worse before they get better."
Bloxham chief economist Alan McQuaid said the government's decision to raise value added taxes in its October budget, seeking to shore up deteriorating public finances, was likely to hurt retail sales further.
"There has already been a mass exodus of Irish consumers across the border this Christmas to avail of cheaper prices in (Northern Ireland) in response to a favourable exchange rate and the British government's decision to lower VAT," he said, predicting continued falls in personal spending in 2009 as Irish consumers face up to high levels of household debt.
(Editing by Ruth Pitchford)