Australia’s June retail sales report is about to be released.
After two months of strong gains, bucking the trend seen throughout much of the past two years, economists expect sales growth to slow sharply today.
Proving this report more market-moving clout than usual, it will also contain quarterly retail sales volumes, something that feed directly into household consumption — the largest part of the economy — in Australia’s upcoming Q2 GDP report.
Here’s the state of play.
- In May, nominal retail sales jumped by 0.6%, topping expectations for an increase of 0.2%. It also followed an enormous 1% surge in April which was the largest monthly increase in over two years.
- As a result of the recent spending spree, the year-on-year increase rocketed to 3.82%, the fastest pace since April 2016.
- Sales of household goods (2.2%), clothing, footwear and personal accessories (1.3%), cafes, restaurants and takeaway food (0.6%), other goods (0.6%) and food retailing (0.1%) all increased, partially offset by a sharp decline in department store sales which fell 0.7%.
- By location, sales in New South Wales jumped by 1.3%, the fastest of any state and territory.
- Elsewhere strong increases were recorded in Victoria (1.2%), Tasmania (1.2%), the ACT (1%), South Australia (0.8%) and Western Australia (0.3%), offsetting declines of 1.1% and 0.5% respectively in Queensland and the Northern Territory.
- Today, economists expect sales growth to slow sharply.
- The median forecast offered to Bloomberg is centred around an increase of 0.2%. Individual forecasts range from a decline of 0.2% to an increase of 0.8%, likely reflecting uncertainty over the whether the strength in April and May was driven by one-off weather-related events.
- Released alongside the monthly nominal sales figure, the report will also contain quarterly sales volumes, a key input into household consumption in Australian GDP.
- Volumes — adjusted for price movements — are tipped to surge by 1.2% over the quarter, something that would add significantly to GDP growth. Individual economist forecasts range from an increase of anywhere between 0.6% to 1.5%.
- Combined, both figures carry the potential to move Australian financial markets.
- The Reserve Bank of Australia (RBA) will also release updated economic forecasts at the same time as the retail sales report, ensuring that there’ll be a short-term burst of volatility across markets.
Both reports will be released at 11.30am AEST.
Business Insider will have all of the details once they hit the screens.