Retail Sales — August | By the numbers
- National turnover lifted by 0.4% in the month on a seasonally adjusted basis to $A27.546bn, which slightly missed the median forecast for a 0.5% rise. Last month's initially reported a contraction of 0.1% was revised to a flat (0.0%) outcome.
- In annual terms to August, retail turnover lifted to 2.6% from 2.4%.
- Turnover growth in trend terms increased by 0.1% in August, while the annual pace continued to soften moving down from 2.5% to 2.3% — its weakest since December 2017.
Retail Sales — August | The details
In light of the recent rate cuts from the Reserve Bank of Australia and the increased tax relief for low-and middle-income earners from the Federal government, the breakdown of spending August is worth taking a close look at. Overall, the headline increase was 0.4%, which was the strongest monthly outcome since February earlier this year, while the annual pace lifted to 2.6% to be back where it was around April and May. Excluding food (around 40% of total turnover), spending lifted by 0.5% in August to be up by 1.9% through the year. This was led by clothing and footwear at 1.8% (4.9%Y/Y) and department stores up by 1.1% (1.7%Y/Y). However, the increases in household goods of 0.3% (0.8%Y/Y) and other goods at 0.3% (2.5%Y/Y) were modest. Meanwhile, spending in cafes and restaurants contracted by 0.3% in the month (1.0%Y/Y). Food retailing increased by 0.4% (3.6%Y/Y) matching the outcome from July. All considered, there was a slightly better tone to discretionary retail in August, though that follows a weak July where sales ex-food fell by 0.3%.
Across the states, turnover growth was generally up modestly in August. This was led by Queensland 0.8% (5.1%Y/Y), followed by South Australia 0.6% (2.0%Y/Y). Spending in the two largest states of New South Wales and Victoria increased by 0.3%, though in annual terms it is a vastly different picture, with Victoria running at 3.5% compared to just 0.3% in New South Wales. Turnover lifted by 0.2% in Tasmania for the month (1.7%Y/Y), while Western Australia saw a contraction of 0.1% (2.8%Y/Y).
Online retail spending lifted by 2.9% in August to be up by 12.8% over the year according to the ABS's estimates. As a percentage of total retail turnover, the online space ticked up from 6.1% to 6.2%.
Retail Sales — August | Insights
There was a modest boost to retail spending in August pointing to some flow-through from recent monetary and fiscal stimulus measures. However, it still appears to be too early to assess this impact, and it also needs to be put in the context of a weak outcome in July. Spare capacity in the labour market and low income growth, as well as soft consumer sentiment, remain headwinds to the outlook household consumption growth.