The latest Australian Bureau of Statistics figures this morning for retail sales and construction work are another good example of how Australia is riding the swings and roundabouts of an economy showing multiple levels of strengths and weaknesses.
On the one hand, retail sales fell a seasonally adjusted 0.2% in April, compared with the sharp 1.1% rise in March. But the March figure was revised upwards from the originally reported 0.9% increase, which better than any forecaster had expected. Economists had been looking for a rise of 0.2% in April retail sales, as they had been expecting for March. There were wrong for both months, by a fairly solid margin.
But then the ABS said the March quarter figures for the value of construction work done showed a 2.6% rise to be 14.6% higher over the 12 months to the end of March, an outcome that should make a positive contribution to next Wednesday’s national accounts and the March quarter GDP numbers. It suggests the value of new private investment for the March quarter, due out tomorrow, might be a bit better than expected.
The immediate reaction from the market and some analysts was to ignore the good news from the construction work and concentrate on the fall in retail sales. But in trend terms, there was no change in April: retail sales were up 0.3%, the same as in March and in February.
The ABS said the fall was driven by a 0.8% drop in sales in household goods retailing, a 0.7% fall in other retailing (-0.7%) and a large 1.0% drop in department store sales. Clothing , footwear and personal accessory retailing saw a small 0.1% drop as well. But it wasn’t all negative, there were rises in cafes, restaurants and takeaway food services of 0.4% and a 0.1% improvement for food retailing.
The ABS said the largest contributor to the fall was Victoria (down 1.6%), followed by Western Australia (-0.2%), Tasmania (-0.6%), the Australian Capital Territory (-0.6%) and the Northern Territory (-0.9%). There were rises in New South Wales of 0.7%, South Australia of 0.5% and Queensland saw a 0.1% rise.
The construction figures though showed a similar sort of swings and roundabouts: engineering was very strong, which isn’t surprising given the resources boom. Building was weak and fell in the quarter, even on a trend basis, down 2.2% for total building and 3.1% for non-residential activity. The seasonally adjusted value of total building was down 5.0%. But the value of engineering work jumped a massive 1.3% in the quarter to almost $30 billion, while the trend estimate for engineering work done rose 5.4% in the quarter.
For all the moaning and groaning about the resources investment boom, it sure is keeping the economy buoyant and helping to more than offset the sluggish activity in retailing and residential and commercial building in particular. It is also helping to soak up the undeniable lengthening list of workers being cut by companies across retailing, manufacturing and services.