Retail Sales — March | By the numbers
- Retail turnover increased by 0.3% in March to $A27.368bn, outpacing the median forecast for growth of 0.2%. Turnover growth in February was revised up to 0.9% from 0.8%.
- Growth in annual turnover lifted to 3.5% from 3.2%, while in trend terms the pace eased to 3.0% from 3.1%.
- Retail volumes fell by 0.1% in Q1, which was a clear miss on the median expectation for +0.3%. Volumes were flat in Q4 after a downward revision from +0.1%.
- On an annual basis, volume growth decelerated to 1.1% from 1.6%.
Retail Sales — March | The details
From a nominal perspective, spending lifted in March for food (+0.4%), household goods (+0.2%), clothing and footwear (+1.2%) and cafes and restaurants (+1.4%). Those gains were pared by declines in department stores (-1.5%) and 'other' retailing (-0.4%). The headline increase of 0.3% in the month and 3.5% through the year remains stronger than sales ex-food (a proxy for discretionary spending), which posted a 0.3% rise in March and an annual increase of 2.9% (click on the charts to expand).
For the quarter, turnover lifted by 0.7%, mostly reflected by a solid rise from food (+1.5%). Spending within cafes and restaurants also lifted (+1.5%), followed by modest increases from 'other' retailing (+0.3%) and clothing and footwear (+0.1%). Notable declines were recorded in department stores (-1.1%) and household goods (-0.6%). Turnover ex-food lifted by 0.2% in Q1.
While retail spending increased by 0.7% in the quarter, sales volumes fell by 0.1%. That reflected a 0.8% quarterly increse in retail prices, taking the annual increase to 2.0% from 1.4%.
Looking further into the details, food prices lifted by a sharp 1.4% in the quarter, likely in response to the impact from drought conditions, while cafe and restaurant prices escalated by 0.5% in Q1. Prices remained flat in household goods, department stores and 'other' retailing. Discounting still looks to remain a factor for clothing and footwear, with prices down by a further -0.2% in the quarter.
The detail for retail volumes across the categories in Q1 was notably weak for the discretionary areas, with department stores -1.2% and household goods -0.6%. There were modest increases from clothing and footwear (+0.3%), 'other' retailing (+0.3%) and food (+0.1%). Consumption in cafes and restaurants increased by a solid 1.0%.
Turning to the states, nominal spending lifted almost across the board in March; NSW +0.2%, VIC +0.7%, QLD +0.6%, SA +0.1% and TAS +0.4%, however; turnover in WA declined by 0.7%.
For Q1, turnover was led by NSW (+1.1%), followed by QLD (+0.8%), VIC (+0.6%), SA (+0.4%) and WA (+0.2%), however TAS declined by 0.4%. Annual turnover growth in QLD (+5.3%), VIC (+4.7%) and TAS (+3.7%) is outpacing the national rate (+3.5%), though NSW is clearly lagging (-2.7%).
Lastly, the volume data for the states was unequivocally weak. NSW led with a 0.6% rise in Q1, but annual growth is subdued at 0.9%. Volumes fell across the remaining states; VIC -0.3%, QLD -0.1%, SA -0.4%, WA -0.6% and TAS -0.9%.
Retail Sales — March | Insights
The key takeaway from today's report is the 0.1% decline in sales volumes in Q1. This outturn follows a flat (0.0%) result in Q4 of last year. Clearly, retail consumption has been weak over the past 6 months, which is likely the response to concerns around a household wealth effect from declining property prices, low wages growth and a focus on paying down debt. Retail volumes account for around 30% of total household consumption within GDP calculations, with the remainder made up from spending on services. Q4's National Accounts showed household consumption growth slowed to a 2.0% annual pace from 2.6%, with today's report indicating that trend likely continued into Q1.
