Bad news for all the retailing gloomsters, the sector isn’t the basket case that they all claim it is. Nor is retailing booming, as it did before the GFC, in fact the latest figures show that it is doing quite nicely: a Goldilocks performance, not too hot and certainly not too cold.
In fact, the latest monthly retail sales data from the Australian Bureau of Statistics this morning shows that Australian retail turnover rose 0.6% in August, seasonally adjusted, following a rise of 0.6% the previous month and a fall of 0.1% in June.
Economists had forecast a rise of 0.2%, so they missed this rise, just as they missed Tuesday’s bigger-than-expected trade surplus and sharp rise in building approvals.
What’s that? Two successive months where retail growth has been a solid, unchanged 0.6%? What has happened to the gloomy shopper, the cautious consumer and the stay-at-home onliners at Amazon, or eBay, buying offshore at at home, cheaply and with more variety and ruining the fortunes of billionaires such as Gerry Harvey and the multimillion-dollar salaries and incentives for the CEOs of Myer, David Jones and a host of other CEOs at legacy retailers?
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
The answer is Australian consumers are, well, consuming in moderate numbers and amounts. Add in the still solid overseas travel and car sales and the entire retail sector is doing much better than many commentators are willing to admit after months of writing gloom and doom. The solid growth in consumption belies the negative readings in monthly consumer confidence surveys and talk that the political debate is inhibiting activity. If it is, it is keeping a lid on much stronger levels of consumption.
The rise in sales in August was across all states and most sectors of retailing, except for department stores (listen for the squeals from Myer and David Jones) and operators in the clothing and footwear segments.
It came after data out on Tuesday showed a surge in exports in August to a record $28.3 billion and the second highest trade surplus on record of $3.1 billion (and a good chance of that being repeated in September, thanks to the fall in the value of the Australian dollar). As well, there was a 11.4% rise in building approvals, thanks to a sharp jump in approvals of apartment blocks, and another 1% dip in private home approvals.
And then the RBA trailed a very big hint after yesterday’s board meeting that interest rates could fall at the Melbourne Cup day board meeting because inflation seems to be easing, and so long as the September quarter CPI, (out October 26) comes in with a moderate reading. That seems to be on the cards given the fall in fruit and vegetable prices and a fall in the June quarter CPI after some revisions revealed last month.
But it is now quite clear that the domestic economy isn’t as weak as many economists and rate-cut urgers have insisted it was. As the June and March quarter national accounts have shown, domestic consumption is still running at a solid 3% or more, which is not a sign of a recession, even if there are slow spots in some parts of retailing, housing and manufacturing.
Figures out on Monday showed manufacturing activity contracted again last month, but this morning the monthly the survey of services (a far bigger part of the economy) showed a small expansion in September.
And then there’s the nature of today’s retail data, which will confuse the “Rate Cut Looms” enthusiasts, as well as those retailers, unions and their mates in the media and economists who reckon the domestic economy is weak, not running well, and operating in a multispeed fashion.
The ABS data shows that turnover rose in household goods retailing (1.7%), food retailing (0.6%), cafes, restaurants and takeaway food services (1.2%) and other retailing (0.3%). Turnover fell in department stores (-0.8%) and clothing, footwear and personal accessory retailing (-0.3%).
Turnover rose in New South Wales (1.0%), Queensland (0.5%), Western Australia (0.9%), Victoria (0.3%), South Australia (0.6%), Tasmania (0.8%) and the Australian Capital Territory (0.3%). The Northern Territory (0.0%) was unchanged.
Retail sales growth in the three months to August is now running at a solid 4.4%, which isn’t boom like, nor is it a recession.
And the retail sales figures do not include the strongly growing overseas travel sector, or car sales. Both offshore travel and car sales are at or near record levels of activity.
The sharp fall in the US dollar on the past two months doesn’t seem to have impacted retailing, yet, but it may show up in September and October data with the currency shown 14-15% from its peak in late July. And we have to wait and see what impact the sharemarket volatility and fears about the eurozone have on retail activity in coming months.