Australia’s retail sales were flat in July, recording no growth for the month and declining to just 2.0% for the year-ended July 2016. There is no gilding of this lily. Retail sales are in a slump, have been for some time, and re contributing to slow inflation, which flows through to the worrying GDP growth outlined in the previous item.
The chart shows just how long the decline in retail sales has been occurring. From a peak in September 2014, retail sales have essentially declined ever since.
To go straight to the dashboard and take a closer look at the data, click here.
On a trend basis, it is hard to escape the expectation that Australia’s retail sales will be negative for at least some of the next few months, if not longer. There seem to be few drivers for improvements in retail sales on an economy wide basis.
However, there are some bright spots, even in this poor data. Two of the retail sectors performing the best are those related to housing, displayed in the chart below.
To go straight to the dashboard and take a closer look at the data, click here.
The Furniture, Floor Coverings and Homewares group saw month-on-month growth of 1.4% in July, bouncing back from a negative contribution the prior month.
Similarly, but generally stronger over recent months, the Hardware, Building and Garden Supplies group saw growth of 2.9% in July, compared with the month earlier.
That is good news perhaps, for the forestry and broad wood products sectors, but there is a pretty clear relationship between these retail sales and the expenditure on new housing and alterations and additions. In an economy that is under-performing, when the housing boom slows, we have to ask, where will our next round of retail sales be coming from?
Unfortunately, there is no clear, and certainly no easy answer. However, as mentioned above the uptick in national income seen in this quarter’s national accounts may start to flow through to retail sales.
