Retail Sales — January | By the numbers
- National turnover fell by 0.3% in the month of January in seasonally adjusted terms to $A27.632bn; a downside surprise on the consensus estimate for a flat outcome (0.0%). Sales in December were revised to show a steeper fall of -0.7% from the -0.5% reported initially.
- Annual turnover growth decelerated from 2.6% (revised from 2.7%) to 2.0% to its slowest pace since October 2017.
- In trend terms, turnover edged up by 0.1% in the month, while the annual pace ticked lower from 2.4% to 2.3%.
Retail Sales — January | The details
After falling by 0.7% in December, retail sales contracted by a further 0.3% in January. The ABS noted that the pullback in December may have included some bushfire-related impact, though it appeared to be mainly as a result of a bringing forward of spending into November as consumers capitalised on Black Friday sales. In January, though, the effects of the bushfires became clearer to the ABS, noting that: "Bushfires in January negatively impacted a range of retail businesses across a variety of industries". For context, the last occasion of back-to-back declines in monthly retail sales was in July-August 2017.
As the chart, below, highlights, the weakness was broad-based across the sector in January with declines for household goods -1.1% (0.9%yr), clothing and footwear -1.1% (2.8%yr), department stores -2.2% (0.6%yr), other -0.1% (1.7%yr) and cafes and restaurants -0.3% (1.3%yr). Food was the only category that advanced, rising by 0.4% in the month to be up by 2.7% over the year. If the food category is excluded, total sales declined by 0.7% in January, slowing annual growth from 2.5% to 1.4% — its weakest pace since October 2017.
As the chart, below, highlights, the weakness was broad-based across the sector in January with declines for household goods -1.1% (0.9%yr), clothing and footwear -1.1% (2.8%yr), department stores -2.2% (0.6%yr), other -0.1% (1.7%yr) and cafes and restaurants -0.3% (1.3%yr). Food was the only category that advanced, rising by 0.4% in the month to be up by 2.7% over the year. If the food category is excluded, total sales declined by 0.7% in January, slowing annual growth from 2.5% to 1.4% — its weakest pace since October 2017.
While the bushfires and smoke haze kept people indoors, there was no spillover into online retail. As a percentage of total retail turnover, spending in the online space fell from 6.6% to 6.3% in January, according to the ABS's latest estimates.
Looking across the states, the ABS reported that the effects of the bushfires were most pronounced in New South Wales (-0.1%mth, -0.3%yr), Victoria (-0.2%mth, 2.5%yr) and the Australian Capital Territory (-2.3%mth, 1.5%yr). Broadly flat outcomes were recorded in January for Queensland -0.1% (4.9%yr) and South Australia 0.1% (1.0%yr). Western Australia fell by 1.1% in January, which was its worst monthly outcome since September 2017, resulting in annual growth falling from 2.8% to 1.7%. Tasmania and the Northern Territory both declined by 0.5% in January.
Retail Sales — January | Insights
A weaker-than-expected result as the effects of the summer bushfires on economic activity become evident. Soon after the bushfires were contained and stopped burning, the retail sector faced further headwinds as the coronavirus outbreak from China escalated. There have been widespread reports of panic buying as people prepare to stay away from the shops, so retail spending may see a bounce back in February and or March before likely falling off again thereafter if the concerns persist.