Australian retail sales were up 0.3% in February, slightly below the 0.4% rise expected. Spending in discretionary categories (0.6%) underpinned the lift in retail sales, with the ABS attributing this strength to the Taylor Swift Eras Tour. Retail sales have been highly volatile over recent months due to seasonal effects, but the underlying momentum is soft with February sales ($35.9bn) only marginally higher (0.8%) than their level last October.
February sales moderated to a 0.3% rise following a sequence of volatile outcomes around the turn of the year. This stretches back to November when Black Friday discounting drove an acceleration in turnover (1.5%) in the lead-up to Christmas; this was followed by a pullback in December (-2.1%) and then a rebound in January (1.1%).
Overall, this leaves the level of retail spending only a little above where it was in October, prior to the period of seasonal volatility. Discretionary spending (total sales ex-food) lifted by 0.6% in February, outperforming the increase in headline sales; however, both are running at around the same pace in annual terms: headline 1.6% and discretionary 1.5%, which is weak relative to the pace in growth in the population at 2.5% according to the ABS's latest estimate.
Clothing and footwear spending surged by 4.2% in the month - its strongest rise since January 2023 - driving the rise in discretionary spending. The ABS credited this result to fashion, accessories and merchandise sales associated with the Taylor Swift concerts in Sydney and Melbourne. Flow-on effects were also evident at department stores (2.3%) and cafes and restaurants (0.5%m/m). These gains were attenuated by softness in food (-0.1%), while household goods (-0.8%) and 'other' retailing (-0.4%) also eased.
Notably, the increase in turnover at the national level was driven almost exclusively by New South Wales (0.6%) and Victoria (0.7%), with the Eras Tour generating additional spending in the host cities of Sydney and Melbourne. Spending across the other states (ex-territories) declined by 0.2% in the month, weighed by Queensland (-0.5%) and Tasmania (-0.4%).
