Retail Sales — November | By the numbers
- Total retail spending lifted by $114.8m, or by +0.4%, in November to $A27.115bn, which outpaced the market forecast for growth of +0.3%. Turnover growth in October was unrevised at +0.3%.
- Annual growth in retail spending fell from a pace of 3.6% in the previous month to 2.8%, which was impacted by a sizeable base effect as a 1.2% jump in sales growth from November last year fell out of the annual calculation. In trend terms, annual growth has been tracking at a pace of around 3.6% over the past 3 months.
The key to retail spending in November was the impact of Black Friday sales and other variations including click frenzy, which sees retailers participating in promotional activities, mostly on online platforms, though there is some spillover into traditional retailing.
On a seasonally-adjusted basis, total retail spending lifted by $114.8m to $A27.115bn in November. According to the ABS' estimates for online retail, which are not seasonally adjusted, spending surged by 17.8% in the month, or by $286.6m, to $1.892bn. This resulted in the contribution from online spending to total retail sales accelerating by 0.7ppt to a new record-high level of 6.6% in original terms, which is 1.1ppts above its level from a year prior.
Looking across the categories, those typically linked to the online space — such as clothing and footwear and household goods — led turnover growth in the month. Clothing and footwear posted a 1.5% rise, which followed a 2.9% increase last month, while annual growth accelerated from 5.4% to 5.9%. Household goods spending lifted by 1.2% in November, but the annual rate fell to near flat from 3.4%.
Spending in department stores lifted by 0.4% in November to match the rate of growth in national spending, while spending in cafes and restaurants and in 'other retailing' (pharmaceuticals, books, stationery etc) both fell by 0.1%.
Food retailing — the largest category at around 40% of total retail sales — lifted by 0.2% in the month, which inched annual growth up to 4.0%.
Removing the impact of the food category, broad-based discretionary retail spending increased by 0.6% in the month, though annual growth fell from 3.4% to 1.9% reflecting the base effect discussed earlier.
Turning to the state detail, the outcomes were mixed in November. New South Wales led with an increase of 0.8%, which follows two consecutive monthly declines. Annual growth has now slowed to just 1.9% from a recent peak of 4.2% in August. This is despite very strong labour market conditions and solid population growth, potentially indicating some impact from declining property prices.
Turnover growth was soft for Victoria at just 0.1%m/m, though its annual rate remains the strongest in the nation at 4.6% despite a recent cooling. Victoria's retail sector has benefitted from a very strong population growth and residential construction activity.
For the other states, Western Australia (+0.6%m/m) and Queensland (+0.4%) posted gains, while South Australia was flat and Tasmania declined by 0.2%m/m.
The charts, below, show a comparison in annual growth in retail spending across the states.
Positively this was a stronger-than-expected result, though it could turn out to be a repeat from 2016 and 2017 where sales growth had lifted in November before declining in December. More broadly, this could represent a shift in consumer spending patterns in the lead-up to Christmas as they look to take advantage of sales promotions amid an increasing expansion in online spending. We can expect these retail sales data releases to take on increasing importance for markets in 2019 given the well-documented headwinds facing the household sector from low income growth and a likely negative wealth impact from declining property prices. The Reserve Bank of Australia remains sanguine on the latter.