AU: Retail Sales

December 1, 2016 06:30 CST

Consensus Actual Previous Revised
Month over Month 0.3% 0.5% 0.6% 0.6%
Year over Year 3.5% 3.3% 3.5%

The value of retail sales in Australia rose by 0.5 percent (seasonally adjusted) in October after an increase of 0.6 percent in September (unchanged from the initial estimate). This was stronger than the consensus forecast for growth of 0.3 percent. Sales rose 3.5 percent in year-on-year terms in October, unchanged from the growth recorded in September (revised up from 3.3 percent).

Headline growth in October was driven by higher sales for food retailing (0.6 per cent), household goods retailing (0.7 per cent), other retailing (0.8 per cent) and cafes, restaurants and takeaway food services (0.4 per cent). These gains were offset by lower sales for clothing, footwear and personal accessory retailing (minus 0.4 per cent) and department stores (minus 0.4 per cent)

Turnover rose in most Australian states and territories in October, with Queensland and Victoria seeing the biggest gains of 0.8 percent and 0.5 percent respectively. Sales fell 0.1 percent on the month in South Australia, likely reflecting significant commercial disruption caused by severe storms in late September.

Last month's release showed that seasonally adjusted retail sales fell 0.1 percent in volume terms 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 next week. This weakness, however, was probably concentrated early in the quarter, with the value of retail sales flat on the month in July. Since then, the value of sales has risen in August, September and now October by 0.6 percent, 0.6 percent and 0.5 percent respectively, suggesting there may also have been some improvement in household consumption in real terms since the middle of the year.

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.