Australia’s retail sales rose 0.3% in March 2019, ahead of expectations that averaged 0.2%. However, the underlying data – the volume of sales – were down 0.1% in the March quarter. Significantly, the March quarter result was the first negative quarter since 2012, dragged down by heavy declines in household goods and department store sales.
The seasonally adjusted real retail sales data – shown below – paints an increasingly grim picture for the Australian economy. It is one of the factors the returned Morrison Government will need to address if the Australian economy is to get moving again. If the June quarter is anything less than strong for retail sales, annual growth will fall further.
In real terms, retail sales in the March quarter slipped to negative (-0.1%), having been flat in the December quarter of 2018. Those two quarters fed into the 1.0% annualised retail sales growth for the year-ended March.
It is true that on a cash basis, as the chart below shows, retail sales appear to be on the improve. But at an annualised 3.3% for the year to the end of March, even that is not much to write home about.
To go straight to the dashboard and take a closer look at the data, click here.
When examining the contributions to retail sales, we can see in the chart below the year-end contributions of two sectors: Hardware, Building and Garden Supplies (red line) and Furniture, Floor Coverings ands Homewares (blue line), compared with the All Industries total (black line).
To go straight to the dashboard and take a closer look at the data, click here.
Over the year-ended March, the Hardware group has experienced retail sales growth of 3.1%, down from 5.0% a year earlier. The Furniture group is languishing in negative territory, with sales having declined 2.7% over the same periods, compared with the positive 3.7% growth in sales recorded a year earlier.
Although it has peaked and troughed away from the All Industries line, in general, the Hardware group has worked towards the average. That is less the case – certainly right now – for the Furniture group. The latter is displaying all the signs of depressed consumption, while the former is tracking neatly along with other industries.
There is a nexus between retail sales, inflation and economic growth on the one hand and wages growth on the other. But, there is more to it than that, of course, because if wages increase, there is no certainty wage earners will spend significantly more with retailers, especially the bricks and mortar retailers.