Australia: Retail sales disappoint again – ANZ

Jo Masters, Senior Economist at ANZ, notes that Australia’s nominal retail sales growth continued the run of soft outcomes, rising by just 0.1% m/m and 2.8% y/y in June and this is the weakest y/y outcome since July 2013.

Key Quotes

“On a three month-end annualised basis, retail sales were up 1.9% in June compared with 2.8% in May.

• Surprisingly, retail sales in both NSW and Victoria fell in June by 0.2% m/m and 0.1% m/m, respectively. Spending in these two states has underpinned retail sales over the past year. By contrast, sales rose by a healthy 1.1% m/m in Queensland in June.

• As expected, clothing sales bounced back – up 4.7% m/m – as cooler weather hit.

• Spending on food and hardware, building, and garden supplies were both particularly weak, down 0.6% m/m and 0.5% m/m respectively in June.

• Interestingly, the weakness was concentrated in small store sales. Indeed, the more reliably-measured sales by large retailers rose by 0.4% m/m, which was the strongest outcome since October 2015. Small store sales tend to be volatile given they are surveyed.

• Retail volumes were also weaker than expectations, rising by 0.4% q/q in Q2 compared with 0.5% q/q in Q1. In annual terms, retail volumes have continued to moderate, with y/y growth slipping to 1.9% in Q2 from 2.3% in Q1.
• Retail price inflation remained weak, with prices rising 0.2% q/q in Q2 compared with 0.1% q/q in Q1. The impact of competition was again highlighted with prices falling for clothing & soft goods in department stores and ‘other’ retailers. Prices are just 1.3% higher than a year ago.”