Australian retail sales came in stronger than anticipated in June, making it 3 straight months where the data has surprised to the upside.
Retail sales – June | By the numbers
- Retail sales growth in June increased by +0.4% to $A26.812bn, which exceeded market expectations for growth of +0.3%. Annual growth lifted from 2.5% to 2.9%.
- Retail volumes (sales adjusted for inflation) in Q2 increased by +1.2%q/q, which outpaced the median market forecast for +0.8%. Annually, volumes remained at +2.5%.
Retail sales – June | The details
In June, nominal sales were broadly stronger across the categories — except for department stores (-1.2%m/m). Clothing and footwear led with a rise of +1.7%m/m. This was followed by Cafes and restaurants (+0.9%), while Food and Household goods saw increases of +0.4%m/m. As a broad measure of discretionary spending, sales ex-food increased by +0.4% in June, with annual growth a tick higher at +1.9%.
Across the states, retail spending continues to be led by Victoria with a +1.1% rise in June. Base effects saw annual growth for Victoria jump 2ppts to +5.8% — comfortably the strongest pace in the nation. Sales growth in New South Wales for June matched the national result (+0.4%) to be tracking at +3% over the past 12-months. In Queensland, spending declined by -0.3%, which slowed annual growth to +0.6%.
The ABS also reported that online retail continued to gain market share, accounting for 5.7% of total turnover in June. This was up from May (5.6%).
The quarterly data showed that volumes were led by the discretionary areas; Department stores (+2.2%q/q), Clothing and footwear (+2.0%q/q). However, this was on continued discounting with prices for both categories down a further -0.4% in Q2.
Volumes in Q2 also increased for Food (+1.6%) and Household goods (+1.4%) on weaker prices (-0.2% for both). Overall, retail prices declined -0.1% in Q2 and remain virtually flat over the past year (+0.2%).
Retail sales – June | Insights
Today’s result is a positive looking towards Q2 GDP calculations — retail volumes account for around 30% of household consumption, which itself is the largest component of Australia’s economy (around 60%). However, this should be viewed in context because the quarterly profile has been volatile (0.1%, 0.8%, 0.2% and now 1.2%). Annual growth has held at 2.5% over the past 3 quarters. Meanwhile, the ongoing softness in prices highlights pressures from competition in the retail sector and slow wages growth.
