Retail sales up a weak 0.6% in August


Retail sales up 0.6 percent in August, underpinned by consumer trend towards home improvements and nesting

October 5, 2011

Peak retail industry body the Australian Retailers Association (ARA) says the moderate 0.6 percent seasonally-adjusted increase in retail sales in August owed much to a consumer trend towards home improvements and nesting with other retail categories showing a worrying decline in the lead up to Christmas.

Executive Director Russell Zimmerman says significant year-on-year declines across clothing and footwear (-6.6 percent), department stores (-3.6 percent), and cafes, restaurants and takeaways (-2.6 percent) are a worrying sign consumers are reigning in their spending at a critical time on the retail calendar.

"While we hope the sector has actually felt the reported monthly boost, year-on-year declines across key categories show consumers aren’t coming to the retail party for upcoming festivities like spring racing, Christmas and New Year.

"Groceries and household goods have shown both month-on-month and year-on-year boosts showing consumers are retreating into their homes rather than spending in department stores and on eating out.

"Compared to August last year sales for household goods are up 2.2 percent - a sign people are hibernating, bringing their focus onto home improvement and ensuring the ‘nest’ is a good environment to spend more time.

"Strong year-on-year growth in food retailing (5.4 percent) shows food is not only buoying up overall retail trade figures for the sector, it also displays a trend towards consumers hibernating in their homes as they reign in discretionary spend to deal with the rising cost of life’s necessities like groceries, transport and utilities," he says.

In this context Zimmerman says yesterday’s decision by the Reserve Bank to maintain interest rates for another month is "disappointing".

"After renewed speculation there will be an interest rate cut before Christmas, we are calling for the RBA to ease the pressure in November. There are only two more chances to try and put more cash into consumers’ pockets in time for the festive season," he says.

"The next couple of months is usually the time of year when retailers will see consumers let go a little and start to enjoy the racing and festive seasons but retailers need customers more than ever right now- the logic can’t be ignored if jobs and growth is to be upheld in a $240 billion sector."

MONTHLY RETAIL GROWTH

The latest ABS Retail Trade figures show that Australian retail turnover rose 0.6 percent in August 2011, seasonally adjusted.

Turnover rose in household goods retailing (1.7 percent), food retailing (0.6 percent), cafes, restaurants and takeaway food services (1.2 percent) and other retailing (0.3 percent).

Conversely, turnover fell in department stores (-0.8 percent) and clothing, footwear and personal accessory retailing (-0.3 percent).

Turnover rose in New South Wales (1 percent), Queensland (0.5 percent), Western Australia (0.9 percent), Victoria (0.3 percent), South Australia (0.6 percent), Tasmania (0.8 percent) and the Australian Capital Territory (0.3 percent). The Northern Territory was unchanged.

YEAR-ON-YEAR GROWTH

Year-on-year retail sales were up by 2.1 percent, with clothing, footwear and personal accessory retailing (-6.6 percent), department stores (-3.6 percent) and cafes, restaurants & takeaways (-2.6 percent) recording declines. Other retailing (5.3 percent), food retailing (5.4 percent) and household goods retailing (2.1 percent) reported rises.

Queensland (3 percent), Western Australia (8.9 percent), Victoria (2.6 percent), Tasmania (0.8 percent) and Northern Territory (2.5 percent) experienced growth year-on-year; while New South Wales (-0.3 percent), South Australia (-1 percent) and the Australian Capital Territory (-0.8 percent) reported falls.

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