Retail Sales — July | By the numbers
- Growth in retail turnover on a seasonally adjusted basis fell by 0.1% in July to $A27.411bn, which was against expectations for a rise of 0.2%. Turnover lifted by 0.4% in June.
- Over the year to July, retail spending increased by 2.4% moderating from a 2.5% pace in June.
- In trend terms, retail sales increased by 0.1% in the month, though the annual pace slowed from 2.6% to 2.4% — its softest since December 2017.
Retail Sales — July | The details
In July, weakness was notable in the discretionary areas of spending. Looking across the board, spending increased in only two categories in the month, with food up by 0.3% (+3.2%Y/Y) and household goods ticking up by 0.1% (+0.6%Y/Y). Spending in all other areas declined in July; clothing, footwear and personal accessories -1.0% (+3.2%Y/Y), department stores -0.2% (+0.6%Y/Y), other -0.4% (+2.5%Y/Y) and cafes, restaurants and takeaway food -0.6% (+2.2%Y/Y). While retail spending on a headline basis fell by 0.1% in the month, if the food category, which accounts for around 40% of total turnover, is omitted then overall discretionary spending fell by 0.3% month-on-month to an annual pace of 1.8%.
On a state-by-state basis, retail spending was weak in July. Western Australia was the only state to record growth in turnover at 0.6% in the month, which saw the annual pace rise to 3.0% — its fastest since August 2015. Spending declined elsewhere; New South Wales -0.1% (+0.5%Y/Y), Victoria -0.1% (+3.3%Y/Y), Queensland -0.2% (+4.2%Y/Y), South Australia -0.5% (+1.7%Y/Y) and Tasmania -0.1% (+2.2%Y/Y).
Growth in online retail sales lifted by 1.0% in July according to the ABS's estimates, though that came after a 2.2% contraction in the previous month. As a percentage of total retail turnover, online sales remained at 6.1% in July.
Retail Sales — July | Insights
This report appears to indicate that the stimulus from the Reserve Bank of Australia's rate cuts in June and July and the federal government's tax cuts for low-and middle-income earners are yet to filter through to the real economy. Another consideration is that the improvement in conditions in the two major capital city housing markets of Sydney and Melbourne is only a recent development, though if proves to be sustained this would also be likely to support retail sales growth.