Compared with May, the value of retail sales rose 0.7% in June 2015, making a strong contribution to year-end growth of 5.0%, measured on a seasonally adjusted basis. Solid total growth was however eclipsed by housing and related sectors which experienced sales growth of approximately double that of the national average.
Relatively strong seasonally adjusted retail sales growth is indicative of several features of the Australian economy, not least of which is low interest rates and limited non-housing investment opportunities. Some form of housing expenditure seems to be proving irrepressible however, for pretty much everyone in the country. If we are not buying a first home, we are investing in property, renovating our existing home or just sprucing the place up a bit.
As the chart below shows, for the better part of the last two years, two sectors have stood, without exception, above the average of all industries.
The first, shown in the blue bars, is Furniture, Floor Coverings and Homewares. Compared with May, it was up 1.2% in June 2015. On an annual basis, for the year ended June 2015, sales were up a very healthy 9.8%.
The second sector, shown in the red bars, is Hardware, Building and Garden Supplies, which rose four times higher than the all industries average in June 2015, compared with the prior month, recording a 2.8% month-on-month lift. As a result of this strong performance, annual sales were up 10.9% for the full year, compared with the prior year.
To go straight to the dashboard and take a closer look at the data, click here.
There seems little doubt that access to historically cheap credit is a driver for expenditure on non-productive goods for housing. The risk, if there is one, is that over-extension of credit could make maintaining payments on the bricks and mortar more difficult in the future.
Though that is something to contemplate, at least for the time being, it seems many of us can do that from the comfort of a new lounge suite, resting on new floorboards, while looking out our newly curtained windows at a freshly seeded lawn, new timber framed garden beds and that long overdue pergola.
