0.6% Rise Recorded in Australian Retail Sales

Australian retail sales rose by 0.6% in September from August, the Australian Bureau of Statistics said Friday. Retail sales rose at a seasonally adjusted 0.6% in September after growing 0.5% the month before, the national statistics bureau reported today. That was the fastest increase in over a year. A median estimate of economists forecast retail spending to increase 0.4%.

It was the largest percentage increase since June 2015, and saw growth in sales from a year earlier accelerate to 3.3%, the fastest pace seen since May.

Spending is being supported by above-average consumer confidence, record-low interest rates, falling unemployment and rising house prices.

By region, there were gains in Queensland (0.6 percent), New South Wales (0.2 percent), Victoria (0.2 percent), South Australia (0.3 percent), the Australian Capital Territory (0.4 percent) and Tasmania (0.1 percent).

Western Australia (-0.1 percent) and the Northern Territory (-0.1 percent) fell in September.

The biggest gains by category were cafes, restaurants and takeaway food services (0.9 percent), food retailing (0.2 percent), household goods retailing (0.2 percent) and clothing, footwear and personal accessory retailing (0.2 percent).

Other retailing (0.0 percent) was relatively unchanged and department store sales (-0.3 percent) fell in September.

The Reserve Bank of Australia this week left interest rates on hold at 1.50%. It passed up the opportunity to cut interest rates further given evidence of broad strength in the economy, and cited solid confidence level in its decision.
Alongside the monthly report, the ABS also released quarterly sales volumes — something that feeds directly into household consumption in Australia’s Q3 GDP — and, as opposed to the monthly report, it was big disappointment.

Volumes fell by 0.1% to $73.88 billion for the quarter, well short of forecasts for an increase of 0.4%. It was the first quarter since Q2 2014 that sales volumes — adjusted for price movements — declined.

Consumer inflation is slowly gaining momentum, but remains well below the central bank’s target. A private measure of consumer inflation expectations improved in October. Official CPI inflation was 0.7% in the third quarter, government data showed last week.

Given nominal sales increased as volumes fell, it indicates that prices rose over the quarter, as seen in Australia’s Q3 CPI report released in late October.

The ABS said that the main contributors to the fall were in food and department stores sales which slide by 0.7% and 1.1% respectively.

The increase in the June quarter, originally reported as a gain of 0.4%, was also revised down to 0.3%.