Weakening sales increases expected over the Christmas period
The latest Australian Food and Grocery Council Chep Retail Index predicts that growth will remain positive over the December quarter, but will be weaker than it was in 2013.
The year-on-year growth reached 4.8 per cent in the September quarter, but it is expected to slow to 3.2 per cent for the three month period ending in December.
“There were signs earlier this year that low interest rates were beginning to power a strong recovery in Australia’s retail sector, assisted by the positive wealth effects from strongly rising house prices and a rising sharemarket,” the report states.
“A strong lift already underway in housing construction should continue to support household goods retailing in the near term.
However, Australia’s economic backdrop remains muted with the slowdown in mining construction still underway and a slowdown now underway in China’s economy.
“Most fundamentally, the labour market will need to improve to underpin and sustain a strong rate of growth in incomes, and therefore retail spending.”
Some sectors have performed better than others over the past year, with clothing retailers showing no growth and department stores having underperformed.
In contrast, food and household goods retailing has shown strong results with a recorded sales growth of 5.5 per cent over the past year.
On a state basis, the strongest growth over the past 12 months has been in New South Wales and Tasmania.
“Looking ahead to Christmas, the AFGC CHEP Retail Index indicates the trading year will finish weaker than it began, although traditionally the food and grocery sector is more buoyant at Christmas than other sectors,” Australian Food and Grocery Council (AFGC) CEO Gary Dawson says.
The AFGC Chep Retail Index is based on analysis of a number of data sources, including Chep Australia’s pallet movements.
“It is encouraging to see the Index anticipating continuing year-on-year growth for the important December quarter,” Chep Asia-Pacific president Phillip Austin says.