The Australian Bureau of Statistics this morning released its data for June retail sales which showed an increase of 0.6% seasonally adjusted for the month.
That sounds like a solid increase but after the much weaker than expected fall of 0.3% in May a bounce seemed inevitable given the fall in sales was as much about a warmer May and seasonal factors as it was about the Budget when you look at the break up between the two months.
In June we saw strong rises in clothing and footwear (weather related most likely) and household goods (budget related perhaps) after solid falls the previous month.
That suggests the data over both months can be averaged out somewhat to adjust for both these factors.
Which leads to the conclusion that retail sales, indeed consumption in Australia is not overly strong nor weak.
It’s a suggestion born out by the fall in the rate of growth in retail sales from 0.6% on average in the second half of 2013 compared to just half that rate in the first half of 2014.
Taken together with the fall of 0.2% over the quarter of the volume measure of retail sales, after a solid 1.3% rise the previous quarter, as well as the big fall in the increase in spending on cafes and restaurants, we get a picture of retail that tells us consumers and households still have concerns and are still being circumspect with what and how much they spend.
The bottom line?
Consumers have now assimilated the solid rise in house prices over the past 12 months and rates of growth in consumption have slowed markedly. Both of which is likely to see the RBA Governor tell us again tomorrow that rates in Australia are on hold for some time yet.
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