Australian retail sales grew modestly in January

Photo by Cameron Spencer/Getty Images

Australian retail sales rose by 0.4% in seasonally adjusted terms in January, rebounding from a shock 0.1% decline in December.

The result was in line with market expectations, driven by a surge in sales in household goods and in cafes, restaurants and takeaway food services.

According to the ABS, they grew by 1.4% and 1.1% respectively during the month, offsetting weakness in sales of clothing, footwear and personal accessories and in department stores of 0.4% and 0.5%.

The ABS said that the main contribution to the rise in household goods retailing came from the electrical and electronic goods industry subgroup with sales surging 2.4% in seasonally adjusted terms.

In nominal terms, sales grew by 3.1% in seasonally adjusted terms in the 12 months to January, up from the 3% level reported in December.

By state and territory, sales rose in Victoria (1.1%), New South Wales (0.2%), South Australia (0.6%), Western Australia (0.3%), the Australian Capital Territory (1.2%) and Tasmania (0.4%).

Sales in Queensland were flat while those in the Northern Territory fell 0.8%.

This chart shows the annual percentage change in nominal retail sales by category and location in January.

By category, sales in cafes, restaurants and takeaway food grew the fastest over the past 12 months at 5.8%, narrowly edging out clothing, footwear and personal accessories for top spot at 5.5%.

Food sales — the largest category by dollar spend — rose by 3.3% over the same period.

At the other end of the spectrum, sales at department stores continued to lag, falling by 3.3% from a year earlier.

From a state and territory perspective, annual growth in New South Wales, Victoria and the ACT came in at 3.2%, 3.8% and 4% in January, continuing to ease after leading the pack for several years thanks to strong house price growth and firm labour market conditions.

South Australia, at 4.5%, recorded the fastest annual growth over the past 12 months at 4.5%. The Northern Territory was the only state and territory to record an annual decline in sales at 0.8%.

There has been little reaction to the retail sales report from financial markets, and has few implications for interest rate settings near-term.

Jo Masters, senior economist at ANZ, called the January result a “solid start to the year”.

However, she doesn’t expect the 0.4% increase will herald the start of a substantial lift in sales growth.

“We see any significant acceleration in consumer spending as challenging given ongoing weakness in wage growth and high household debt,” she says.

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