Your 10-second guide to today's Australian retail sales report

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Australia’s September retail sales report is about to be released.

After two months of declines, including the largest drop in over four years in August, economists expect sales to rebound modestly in September.

Providing this report with more market moving clout than usual, it will also contain quarterly retail sales volumes, revealing an early snapshot on the strength of household spending in the September quarter.

Even if sales do rebound in September, volumes over the quarter are likely to be very weak, providing a worrying signal on health of the most important part of the Australian economy.

Here’s the state of play.

  • In August, sales fell by 0.6%, missing forecasts for an increase of 0.3%.
  • The decline was larger than even the most pessimistic forecast offered by an individual economist, and was the steepest monthly drop since March 2013.
  • Sales for July, originally reported as flat by the ABS, were also revised down to show a decline of 0.2%.
  • As a result of the ugly August report and downward revision to July’s figure, the year-on-year pace of sales slowed to 2.13%, the smallest increase since July 2013.
  • Sales have now fallen in four of the past seven months.
  • By category, sales fell in all sectors aside from department stores and other retailers. Adding to concerns, sales declined in every Australian state and territory over the month.
  • Today, economists expect sales to rebound with the median forecast looking for an increase of 0.4%.
  • Individual forecasts range from an increase of 0.2% to 1.2%.
  • Perhaps bolstering the case for an increase, the National Australia Bank’s (NAB) Cashless Retail Sales Index, an separate indicator on retail spending that correctly foreshadowed the decline in the official ABS figures in August, rose by 0.2% in September.
  • The NAB says that using data mapping techniques, it suggests official retail sales could lift by 0.6%.
  • Alongside the September retail sales figure, the ABS will also release quarterly retail sales volumes, a measure that eliminates the impact of price movements and accounts for around a third of household consumption expenditure, the largest part of Australian GDP at just under 60%.
  • The median economist forecast looks for an unchanged reading, down from 1.5% in the previous quarter. If that occurs, it means retail sales contributed nothing to economic growth over the quarter.
  • Individual forecasts range from a quarterly decline of 0.4% to an increase of 0.5%.
  • Given the weakness in sales seen in July and August, this report is likely to generate higher-than-usual volatility once it’s been released.
  • Only last month the Reserve Bank of Australia (RBA) warned that “slow growth in real wages and high levels of household debt are likely to constrain growth in household spending”.
  • Another weak month in September, particularly as a time when electricity, gas and petrol prices are soaring, will only intensify those concerns.

The retail sales report will be released at 11.30am AEDT.

Business Insider will have all of the details once it hits the screens.

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