Australia's Retail Sector Is Recovering Solidly From The Budget Blues

Samir Hussein/Getty Images

The July retail sales were out this morning and they showed a rise in seasonally adjusted terms of 0.4% to follow on from June’s 0.6% rise and May’s 0.3% fall.

In this data we see the impact of the budget on confidence and spending and in this data we can see why the ANZ remains positive on retail sales after its weekly consumer confidence index has stabilised around long run average levels.

This data today is exactly the sort of outcome that students of the relationship between confidence and spending expected and while there is no doubt that in trend terms at the moment retail sales appear weak, 0.6% in June followed by 0.4% in July is a sign that retail sales will recover into Christmas.

Indeed the bounce back in cafe’s, restaurants and takeaway from last month’s big fall is another sign that have gone into their shell last month Australian households were happier to spend a little on themselves in July.

Overall the data is solid in the context of where the economy is in its economic transition. While consumer confidence holds up retail sales should too.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.