Australia’s February retail sales report is about to be released.
After a less-than-stellar run in recent months, economists are looking for sales to accelerate modestly today, fitting with alternative spending indicators that strengthened over the same period.
However, the ABS’ official measure has undershot expectations by some margin over the past two months, creating renewed doubt as to whether the strength in household spending seen late last year has been sustained in early 2018.
Another weak result today will do little to appease those concerns.
Here’s the state of play.
- Australian retail sales grew by 0.1% in January, a weak result considering sales fell by 0.5% in December.
- Excluding food, and providing a better guide on discretionary spending patterns, sales increased by 0.1% after plunging 1.4% a month earlier.
- Improved sales for “other” goods (1%), household goods (0.1%) and in cafes, restaurants and takeaway food outlets (0.1%) were offset by declines in clothing, footwear and personal accessory sales (0.7%) and in department stores (0.6%).
- Food retailing, the largest category by dollar spend, was unchanged from a month earlier.
- By location, sales rose by 0.4% in Queensland and 0.3% apiece in Victoria and Western Australia, overriding declines of 0.2%, 0.5% and 0.6% respectively in New South Wales, the Northern Territory and South Australia. Sales were flat in the ACT.
- The weak headline result saw the annual increase slow from 2.5% to 2.1%, the weakest outcome since October 2017.
- Today, economists are looking for a modest improvement in February.
- The median forecast looks for an increase of 0.3%. Individual forecasts range from a gain of anywhere between 0.2% to 0.7%.
- The National Australia Bank’s Cashless Retail Sales Index — an indicator that had a fairly good track record for predicting movements in the ABS’ official measure up until recently — suggests sales may have grown by 0.7% over the month.
- Separate data from the Commonwealth Bank revealed spending at retail outlets jumped by 1.7% over the same period, the largest increase since July 2009.
- That was when spending was booming on the back of the government’s decision to deliver cash payments to households to offset the effects of the global financial crisis.
- While that suggests the risks to today’s report are to the upside, both the NAB and CBA series reported similarly strong results in January. Obviously, that strength was not reflected in the ABS data over the same period.
- Some believe the later-than-usual iPhone model release last year, along with the increased prominence of Black Friday sales in Australia, may have influenced the ABS’ seasonally adjusted data series recently, leading to unusually weak results.
The February retail sales report will be released at 11.30am AEST.
Business Insider will have all of the details once it hits the screens.
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