Data Snapshot: Retail Sales - Consumers’ Pulse Barely Beating

The key points in this report are:

 

  • There was a slight uplift in retailing in nominal terms in June, but the underlying trend remained weak.
  • Nominal retail sales (or values) grew 0.4% in June, which is the strongest monthly gain in four months. Annual growth lifted modestly, from 2.4% in May to 2.5% in June, but remains well below the long-run average.
  • In volumes terms, which adjusts for prices, retailing grew just 0.2% in the June quarter, the first increase in half a year. On an annual basis, retail volumes also grew 0.2%, the weakest annual rate since the June quarter 1991, Australia’s last recession.
  • Retailing volumes were especially weak in NSW where debt burdens are highest. The State recorded its first annual contraction since the September quarter 2011. There were also declines on an annual basis in Western Australia, Tasmania and the Northern Territory.  Annual growth in retailing was also soft in South Australia and the ACT, and was relatively better in Victoria and Queensland. 
  • Lower interest rates, tax handouts from this financial year and a bottoming out in dwelling prices in Sydney and Melbourne should provide some support to spending over the second half of 2019. However, the headwinds of high household debt and slow wage growth remain. With slow income growth over a number of years, there will be little room for significant growth in consumer spending, as household savings rates have eroded over time. This would suggest a modest pick up in growth at best.   

 

Please see the attached report for more information.



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