Australia’s July retail sales report has just been released and it was another sign that the budget assumptions of increased household consumption may be foundering.
Coming in with no changed on June sales the 0.0% growth undershot the markets expectation that retail sales would growth 0.3% during the month. That follows on from Junes minuscule 0.1% growth rate.
If there has been a common theme from sales so far in 2016, it’s been underwhelming levels of growth as retail sales slows.
The Australian Bureau of Statistics reported that across the various retail sectors (in seasonally adjusted terms) “there were rises in food retailing (0.7 per cent), cafes, restaurants and takeaway food services (1.2 per cent), other retailing (0.2 per cent) and clothing, footwear and personal accessory retailing (0.3 per cent)”.
The continued saw-tooth pattern that is evidenced by Cafe and Restaurant spending, a discretionary indicator I use to judge the optimism of households, suggests that high levels of debt and concerns about the economic outlook are weighing on consumers.
On the negative side of the ledger the ABS said there were falls in department stores (-6.2 per cent) and household goods retailing (-0.7 per cent) in July 2016.
Looking at the State based data the Bureau said it was New South Wales and Victoria, down 0.2% and a whopping 0.6% respectively, which was the big drag on sales across the Commonwealth.
Elsewhere the data showed that (in seasonally adjusted terms), “there were rises in Queensland (0.5 per cent), South Australia (0.5 per cent), Western Australia (0.3 per cent), the Australian Capital Territory (1.2 per cent), Tasmania (0.5 per cent) and the Northern Territory (0.4 per cent)”.
There can be little argument that these are disappointing figures. The data suggests that assumptions about the strength of household consumption this financial year could prove overly optimistic.
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