Retail Sales — October | By the numbers
- Total turnover growth increased by 0.3%, or $92m, in October to $A26.987bn. This matched the market expectation for growth of 0.3% (prior rev +0.1% from +0.2%)
- Annual growth retail turnover was 3.6%, unchanged from the previous month.
Retail Sales — October | The details
Looking across the categories, spending saw a broad-based rise in October, though at a generally soft pace with; food +0.2%, household goods +0.6%, clothing and footwear +2.6%, department stores +0.4% and 'other' +0.5%. Spending within cafes and restaurants fell by 0.9% in the month.
As a guide to discretionary spending, turnover growth excluding food sales — which alone accounts for around 40% of total retail sales — was slightly stronger than the headline increase at 0.5% in October. Over the past year, sales growth ex-food has risen by 3.3% compared to overall retail sales at 3.6%.
The state-based data showed some interesting developments. Spending in New South Wales — around 32% of national spending — posted its second consecutive monthly decline at -0.4% in October, which follows a 0.7% fall in September. As a result, annual growth has slowed sharply from 4.3% in August to now 2.1%. This is sure to gain attention given that it is in the capital city — Sydney — where the well-documented declines in national property prices have been most noticed. It is, in all likelihood, too early to identify a clear 'negative-wealth' impact on that basis given the statistical volatility, though it is worth noting that growth in the trend series has also slowed from 3.2%Y/Y in August to 2.9%Y/Y to October.
Retail spending in Victoria remains robust expanding by 0.6% in October. Annual growth did ease from 6.8% to 6.4%, but this is still vastly ahead of the national rate and remains the state contributing most to retail spending. This has, in part, been helped by strong population growth, but there are also other factors evident such as a low unemployment rate, an upswing in infrastructure investment and comparatively better property market conditions relative to Sydney.
Outside of the major states, spending in Queensland picked-up by 1.1% (+4.1%Y/Y) and by 0.6% in Western Australia, as annual growth remained positive (+0.6%) for consecutive months for the first time since July-August 2017. Growth was little changed in South Australia and Tasmania at +0.1% in the month. This slowed annual growth in both states; South Australia from 3.6% to 2.4% and Tasmania from 6.2% to 5.7%.
Growth in online retail continues to rise in Australia, with a 10.5% increase in October to $1.606bn according to the ABS' estimates. Online retail now accounts for 5.9% of total retail sales, up from 5.6% last month and a new record high for this measure. Expect a continuation in November given that this is when 'Black Friday' sales promotions occur. In 2017, online retail spending jumped by 22% in November and by more than 10% in 2016 and 2015.
Retail Sales — October | Insights
This was a modest outcome from retail spending in October, but yesterday's National Accounts would have had many fearing a downside outcome to the 0.3% expectation. The annual pace at 3.6% remains close to the decade average and the same can be said about discretionary sales excluding food. The state-based data should be watched closely as the developments in New South Wales could be providing an early sign that weak income growth and declining property prices are impacting consumer spending.