Australia’s retail sales have underwhelmed yet again in June, rising by a paltry 0.1% to $25.044 billion after seasonal adjustments.
Markets were looking for an increase of 0.4%, double the 0.2% gain seen in May.
The disappointing result, not only in June but over the first half of the year, saw the year-on-year growth rate slow to just 2.76%, the weakest seen since July 2013.
According to the ABS, sales of clothing, footwear and personal accessories (3.5 per cent), household goods (0.3 per cent) and department stores (0.7 per cent) rose over the month, offsetting declines in food retailing (-0.6 per cent), cafes, restaurants and takeaway food services (-0.1 per cent) and other retailers (-0.1 per cent).
Though weak, the composition was broadly in line with expectations given the (late) arrival of winter in Australia’s southeastern states, the most populous in the country.
By location, sales rose in Queensland (1.1 per cent) and Western Australia (0.1 per cent) but fell in New South Wales (-0.2 per cent), Victoria (-0.1 per cent), the Australian Capital Territory (-0.6 per cent), the Northern Territory (-1.1 per cent) and Tasmania (-0.2 per cent). Turnover in South Australia was relatively flat.
The decline seen in New South Wales and Victoria, accounting for the bulk of total retail sales, along with the sharp drop in food retailing — the largest component of any category — explains the enormous headline miss seen during the month.
Mirroring the performance of the June figure, quarterly sales volumes also missed, rising 0.41%. Over the same period, sales in dollar terms rose by 0.46%.
Economists were expecting a quarterly increase of 0.5%, the same level seen in Q1.
It was the weakest quarterly increase in percentage terms since the June quarter of 2014, and saw the year-on-year percentage growth rate fall to 1.9%, the slowest seen in three years.
While slightly missing on forecasts, given this accounts for around 30% of household consumption, the largest component in Australian GDP, it will contribute to GDP growth in the June quarter.
The disappointing June report, whether measured in dollar terms or in volumes, has had minimal impact on financial markets with traders taking the view that it is simply a continuation of the theme seen in recent years.
Disinflationary forces remain, which, coupled with weak incomes growth, continues to weigh on consumer spending.