Retail spending sluggish in June

Louis VuittonRetail sales showed a meagre 0.1 per cent increase in June representing a year on year growth of 2.7 per cent for the year to June 2016, according to the latest Australian Bureau of Statistics figures.

In seasonally adjusted terms, year on year, there were rises in food, 1.8 per cent; household goods, 0.8 per cent; clothing, footwear and personal accessories, 8.7 per cent; department stores, 4.9 per cent; other retailing, 3.8 per cent; cafés, restaurants and takeaway foods, 2.3 per cent.

Total retail sales for the month were $25 billion.

In trend terms, Australian turnover rose 3.1 per cent in June 2016 compared with June 2015. In trend terms, there were increases in the following industries: other retailing, 0.5 per cent; Cafes, restaurants and takeaway food services, 0.4 per cent; Clothing, footwear and personal accessory retailing, 0.5 per cent; and Department stores, 0.1 per cent. Food retailing, 0.0 per cent and Household goods retailing, 0.0 per cent were relatively unchanged in trend terms in June 2016.

Russell Zimmerman, Australian Retailers Association (ARA) executive director, said the June figure is due to a combination of several factors, predominately the lead up to the Federal Election on July 2.

“Elections are notorious for causing lower consumer confidence and depressed sales, which appears to have been the case here,” Zimmerman said.

According to Zimmerman, unseasonably warm temperatures across the nation, deflation, and world events, such as the UK’s Brexit decision and fallout, and the growing prominence of the upcoming US election, all took a toll on consumer confidence in June. He said while some of these issues will cycle out in the next few months, there are some retailers who are “doing it tough at the moment.”

Retailers in the Northern Territory and Western Australia particularly felt the pinch, with the lowest sales in at least five years, with NT experiencing a decline 0f 1.3 per cent in sales, while WA managed an increase of just 0.5 per cent.

Tasmania has continued its sales comeback, with the largest growth of all the states and territories, at 4.6 per cent, followed by Victoria and the ACT with 3.9 per cent and 3.8 per cent growth respectively.

Following on from the trends of the last few months, household goods suffered almost static growth of 0.8 per cent, while food, which is under significant pressure from competition and deflation, posted 1.8 per cent growth.

Department stores saw a healthy increase of 4.9 per cent growth following a period of stagnation in the last two years, while clothing and footwear was the big winner, increasing sales by 8.9 per cent.

The National Retail Association (NRA) said the increase of 0.2 per cent in May in trend terms (0.1 per cent seasonally adjusted) showed the retail trade sector was suffering from a general lack of confidence in the economy.

Dominique Lamb, NRA chief executive officer, said the annualised growth figure of 3.1 per cent was essentially flat when population growth was taken into account.

“The retail sector would normally consider growth of 4.0 per cent per year to be a base level, when population growth is taken into account. So growth of 3.1 per cent for the year is very much a flat, ordinary result,” Lamb said.

Lamb said the Reserve Bank’s decision earlier this week to lower interest rates would inject some much-needed consumer confidence into the market, which would hopefully flow through to stronger growth and employment for retail in the latter half of the year.

“The rates cut was a good start, but retailers also need to see our political leaders doing their part to boost confidence and provide certainty.”

“It’s no coincidence that these numbers have been depressed over several months leading up to the Federal Election. We know that retailers always suffer during long election campaigns while consumers put buying decisions on hold.”

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