Although it is not absolutely clear why this occurred, Australian retail sales rose a strong 0.6% in May 2017, compared with April, after April itself recorded strong 1.0% growth that followed two very poor months for retailers. The result of the rises has been that on a year-on-year basis, Australia’s retail sales expanded 3.6% for the year to the end of May, compared with the prior year.
It is too early to tell if the now three year long decline in retail sales growth is over, but as the chart below shows, this two months of rises is the best retail news – in general – in some time. As the chart shows, most other rallies over the three years have been short-lived, rarely putting on growth for three or more months in a row.
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Examining selected and relevant industries, we can see a clear – and uncommon – distinction between the very solid growth in sales of Furniture, Floor Coverings and Homewares on the one hand and Hardware, Building and Garden Supplies on the other.
As the chart below shows, in May, sales of the ‘Furniture’ classification were up a booming 8.1% compared with April, following both March and April results that were each 4% higher than the prior month. Gerry Harvey, among others will be happy with that result, as the nation spends up on making the interior of their homes more pleasant for the cold winter months.
May was also relatively strong for ‘Hardware’ sales, which saw growth of 2.2% on the prior month. That is modest comparatively with ‘Furniture’, but strong compared with the two negative months before.
To go straight to the dashboard and take a closer look at the data, click here
The differential growth in retail sales in ‘Furniture’ and ‘Hardware’ is important as an indicator of what we might consider the household investment phases. On the face of it, households appear to be focused on interior improvement, rather than external improvements. This could be seasonal – it is winter after all – but it may also be cyclical.
