Australian July retail sales flat: Westpac's Matthew Hassan
GUEST OBSERVER
Retail sales disappointed in July coming in flat vs expectations of a 0.3 percent gain. Annual growth slowed to 2.7 percent with the monthly trend estimate tracking a very weak 1.1 percent annualised pace.
There are some caveats to the July number however. In particular, the storetype breakdown showed an unusually large fall in department store sales – down 6.2 percent in the month in seasonally adjusted terms, coming off a decent 4.5 percent gain in June.
That volatility may reflect shifts in the timing of sales which can be exaggerated by seasonal adjustment (we had similar issues in 2013 and 2012 with a strong June followed by a sharp fall in July that mostly reversed in August).
Weather conditions may also have played a part with an abnormally mild July (the 5th warmest on records back to 1961 according to the Bureau of Meteorology) although this did not stop clothing retailers from posting a 0.3 percent gain.
Ex department stores, retail sales were up a much more respectable 0.4 percent mth, 3.1 percent yr.
Looking across other categories: basic food retail bounced back with a 0.7 percent gain following a very weak June (–0.5 percent mth, the second biggest monthly decline in the last six years); household goods disappointed again with a 0.7 percent fall, ‘other’ retail rose 0.2 percent and cafes and restaurants saw a robust 1.2 percent gain.
As noted in previous reports, some of the ‘mixed messages’ from retail at the moment likely reflect widely diverging performances by state with consumers in the growth centres in the south-east boosting discretionary spend but those in mining states cutting back.
For total sales this pattern reversed somewhat in July with sales softer in Vic (–0.6 percent mth) and NSW (–0.2 percent mth) vs modest gains in Qld (0.5 percent mth) SA (0.5 percent mth) and WA (0.3 percent mth).
Note that all sales figures are in dollar value terms so include any price effects from discounting.
Matthew Hassan is senior economist with Westpac.
