Retail Sales — February | By the numbers
- Retail turnover lifted by 0.8%, or by $223.0m, in February to $A27,267bn to be well clear of the market forecast for growth of 0.3% (prior: +0.1%)
- Turnover growth lifted to 3.2% through the year, accelerating from the 2.7% pace in the 12-months to January in seasonally adjusted terms. On a trend basis, annual growth slowed to 2.9% from 3.1%.
Retail Sales — February | The details
The underlying detail from February was markedly upbeat when compared with January. In nominal terms, retail spending lifted by a sharp $223.0m in the month driven by broad-based gains across the sector; food +$86.0m (+0.8%), household goods +$49.7m (+1.1%), clothing and footwear +$34.2m (+1.6%), department stores +$53.0m (+3.5%). Spending in the 'other' category (+$0.7m, 0.0%) and cafes and restaurants (-$0.4m, 0.0%) was little changed.
The underlying detail from February was markedly upbeat when compared with January. In nominal terms, retail spending lifted by a sharp $223.0m in the month driven by broad-based gains across the sector; food +$86.0m (+0.8%), household goods +$49.7m (+1.1%), clothing and footwear +$34.2m (+1.6%), department stores +$53.0m (+3.5%). Spending in the 'other' category (+$0.7m, 0.0%) and cafes and restaurants (-$0.4m, 0.0%) was little changed.
Excluding the impact of food sales, which accounts for around 40% of total retail spending, turnover growth posted its sharpest monthly increase since November 2017 after lifting by $137m or +0.9%. However, turnover growth ex-food at 2.0% through the year is well behind growth in total retail sales of 3.2%.
Looking across the states, it was a rebound in spending in Queensland that dove the national result. In January, retail sales in that state slumped by 0.5% (or -$28.7m) but surged by 1.4% in February, which contributed $74.2m to the national increase of $223.0m. Outturns in New South Wales (+0.6%, +$56.4m) and Victoria (+0.8%, +$54.7m) were solid in February. South Australia (+0.7%, +$12.2m) and Western Australia (+0.6%, +$17.3m) also contributed to retail spending in the month. Tasmania recorded a sharp decline in the month of 0.7% (-$3.7m).
The trajectory of growth in retail spending has slowed in both New South Wales and Victoria. This fits with Q4's National Accounts that highlighted a sharp slowing in activity over the second half of 2018, due to the household sector reining in consumption in response to slow income growth and declining property prices and a weakening in residential construction.
For the other states, the data are more volatile. Still, growth looks to be on an uptrend in Queensland and Western Australia, though spending appears to be slowing in South Australia and Tasmania.
Lastly, according to the ABS' estimates, online retail spending declined for the second consecutive month, with a $9.1m fall in February to $1.35bn, which is consistent with what has been seen in previous years. As a percentage of total retail turnover, the online space remained at 5.6% in February.
Retail Sales — February | Insights
This was a much stronger-than-expected result relative to market expectations and offers some optimism around the household sector, particularly given the board-based nature of the strength in the underlying detail in discretionary spending and on a state-by-state basis. The measures announced in last night's Federal Budget around tax relief for low-and-middle-income earners are also supportive of the household consumption outlook. Averaging January (+0.1%) and February's (+0.8%) outturns shows growth in retail turnover of around 0.5%, which while still fairly modest indicates that spending has at least not deteriorated in early 2019.
