Australian retail sales accelerated by 0.9% month-on-month in September, coming in well above expectations (0.3%) and posting its strongest rise since January. The ABS reported that spring weather drove increased spending across a range of categories, while the release of iPhone 15 and an energy efficiency rebate on appliances in Queensland were also contributing factors. This latest outturn combined with upward revisions to prior months saw retail sales rise by 0.8% in the September quarter, lifting from a 0.4% increase in the June quarter.
Headline retail sales (0.9%m/m) saw their strongest rise since the start of 2023, with both food (1%) and discretionary-related spending (0.9%) advancing sharply. Sales were revised up for July (0.5% to 0.6%) and August (0.2% to 0.3%). Overall, in Q3, retail sales advanced by 0.8%, driven by a 1.1% uplift in discretionary sales. This was a clear acceleration from weaker outcomes for retail sales in Q1 (-0.1%) and Q2 (0.4%), despite cost-of-living pressures and rising interest rates continuing to impact households. The rapid pace of population growth (running at around 2% in annual terms on most estimates) will be playing a role here. More detailed estimates of spending and underlying volumes are due to be published by the ABS on Friday.
The strongest gains in September came in department stores (1.7%) and household goods (1.5%). Department store sales have held up relatively well amid the headwinds rising by 1.3% over the year. By contrast, household goods have contracted by 4%yr; September's 1.5% rise defied this weakness, with the category being supported by the release of iPhone 15 and government rebates for households to switch to more energy-efficient appliances in Queensland. The ABS attributed the warm start to spring in Australia as supporting areas of spending such as clothing and hardware. Although there was no apparent boost for cafes and restaurants (0%), spending in the category is at record highs. Meanwhile, basic food (1%m/m) surged by its most in 12 months.
Strength in September sales were reflected at the state level. Spending lifted by 1.3%m/m in New South Wales and by 1.2%m/m in Victoria, with these two states accounting for close to 60% of turnover nationally. Tasmania (1.8%) and South Australia (1.0%) rose for the first time since June and May respectively. Sales in Queensland were softer at 0.5%m/m but Western Australia (0.1%) saw the weakest gain.
