AU: Retail Sales

November 3, 2016 07:30 CDT

Consensus Actual Previous Revised
Month over Month 0.4% 0.6% 0.4% 0.5%
Year over Year 3.3% 2.8% 2.9%

Retail sales in Australia rose by 0.6 percent in September after an increase of 0.5 percent in August (revised from 0.4 percent), stronger than the consensus forecast for growth of 0.4 percent. This was the strongest monthly increase in sales so far this year. Sales rose 3.3 percent in year-on-year terms in September, up from 2.9 percent in August.

The increase in the headline number in September reflects higher sales for household goods retailing (2.3 percent), cafes, restaurants and takeaway food services (1.0 percent), food retailing (0.2 percent) and department stores (0.5 percent). These were offset by lower sales in in clothing, footwear and personal accessory retailing (minus 0.6 per cent) and other retailing (minus 0.1 per cent).

Turnover rose in all Australian states and territories in September, with the two largest states, New South Wales and Victoria, seeing the biggest gains of 0.8 percent and 0.6 percent respectively.

Despite the solid monthly numbers for September, seasonally adjusted retail sales in volumes terms fell 0.1 percent in the three months to September, after increases of 0.3 percent and 0.7 percent in the two previous quarters. This suggests some potential for weaker household consumption growth when quarterly GDP data for the three months to September are published in December.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The Retail Business Survey covers all employing retail trade businesses who predominantly sell to households.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the overall picture, but also the trends among different types of retailers. Especially strong apparel or electronics sales can indicate strength in those industries, for example. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.