For the second time in the past 3 months, Australian retail sales have outperformed expectations after a 0.6% rise (vs 0.5% forecast) came through for October. Annual growth accelerated from 2.4% to 3.4%, a 17-month high. Discounting ahead of the Black Friday sales in November looks to have been the driving factor, with discretionary retail spending rising by 0.8% for the month. The Stage 3 tax cuts and electricity bill rebates could be gaining traction with households, consistent with the recent uptick in sentiment indicators.
Headline retail sales lifted by 0.6% in October, rebounding from a slowdown in September (0.1%) that followed a strong gain in August (0.7%). Across this period, retail sales have averaged a 0.5% rise - its strongest momentum since November 2023.
The ABS reported that early discounting into the Black Friday sales was a key factor behind the October result. Electrical goods rose 2.7% - their strongest rise since January - on the back of discounting for TVs and AV equipment. This drove the household goods category to a 1.4% rise for October, underpinning a broader lift in discretionary (or non-food) sales (0.8%) amid falls in clothing and footwear (-0.6%) and department stores (-0.3%) - categories that should benefit through Black Friday. Online sales saw a 0.8% lift, but this was driven by food (2.7%) as non-food sales were flat.
Sales were higher across the states in October. Annual growth is running either side of 4% in Victoria, Queensland and Western Australia, and 3% in South Australia and Tasmania. In New South Wales, sales are tracking a slower 2.4%yr pace; however, that is its fastest pace since May 2023, with the state also accounting for the largest share of national turnover (around 31%).
