Data Snapshot: Retail Trade - Retail Sales Bounce on Discounting

Good afternoon,

 Retail spending in nominal terms rose by 0.4% again in June. The annual growth rate in retailing lifted from 2.5% in May to 2.9% in June, which is the fastest rate in three months.

• The annual pace of retail sales in nominal terms remains well below the long-run average of 3.7%, indicating consumers are still reluctant to come fully out of their shells to spend.
• The category that recorded the strongest growth in the value of retailing in June was clothing, footwear & personal accessories. This category rose by 1.7% in June and by 5.3% in the year to June.
• Retail sales volumes surprised on the strong side. Retailing in volume terms rose by 1.2% in the June quarter, against consensus expectations for a rise of 0.8%. It is the biggest quarterly percentage rise in one year. But the annual rate of growth stayed steady at 2.5%.
• The lift in retail sales volumes was helped by retailers discounting. The retail-trade deflator fell by 0.1% in Q2 and was up only 0.2% on a year ago.
• The consumer is likely to remain constrained in the months ahead by high household debt and subdued wages growth. The moderation in dwelling prices might also likely to make consumers think twice about their budgets and discretionary spending. On the flip side, firm jobs gains and ongoing growth in the population are providing some support to retailing.

 Please see the attached report for more information.

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