Australian retail sales met expectations in October, rising 0.5% to $24.66 billion according to the Australian Bureau of Statistics.
The gain, the highest monthly total on record, left the yearly increase at 3.9%, up 0.2% on the level seen in September. While a small acceleration, the annual increase remains below levels seen in recent years.
In seasonally adjusted terms, increases were recorded in food retailing (0.6%), department stores (3.5%) and household goods retailing (1.1%). There were falls in cafes, restaurants and takeaway food services (-0.6%) and clothing, footwear and personal accessory retailing (-0.1%). Other retailing was unchanged.
Over the past year, household goods recorded the fastest increase in sales, up 6.1%, thanks in part to the booming property markets along Australia’s eastern seaboard. Rounding off the top three, department store sales rose 5.2% while those for clothing, footwear and personal accessories increased 4.7%. Other retailing recorded the slowest annual growth at 2.8% while food retailing, the largest component of all retail spending, increased by a benign 3.2%.
From a state and territories perspective, sales increased in New South Wales (0.8%), Victoria (0.5%), Queensland (0.5%), South Australia (0.3%), Tasmania (0.8%), the Australian Capital Territory (0.6%) and the Northern Territory (0.2%). Sales in Western Australia were unchanged.
On an annualised basis, Victoria and Tasmania recorded the largest increase at 5.4% while New South Wales, the most populous state, saw sales rise 4.4%. Unsurprisingly, the mining states and territories recorded the lowest annual increase in sales, ranging from between 1.6% to 2.7% respectively.
In terms of policy implications, there is little new to come from the October retail sales report. Those states that have had the largest property price increases continue to outperform as are those sales categories most aligned with the housing market.
The question now is whether that trend will continue. Australia’s housing market is now starting to soften, particularly in Sydney and Melbourne, following a steep increase in prices over the past four years. If that continues stronger labour market conditions will be required to ensure sales growth remains at a healthy if not spectacular level.