AU: Retail Sales

Mon Jul 03 20:30:00 CDT 2017

Consensus Actual Previous
Month over Month 0.3% 0.6% 1.0%
Year over Year 3.8% 3.1%

Retail sales in Australia advanced 0.6 percent (seasonally adjusted) in May after an increase of 1.0 percent in April, above the consensus forecast of 0.3 percent. After weakness earlier in the year, the strength in retail sales in both April and May suggest household spending will make a solid contribution to economic growth in the three months to June.

The increase in headline retail sales in May reflected month-on-month increases in most major categories, including household goods retailing (2.2 percent), clothing, footwear and personal accessory retailing (1.3 percent), cafes, restaurants and takeaway food services (0.6 percent), other retailing (0.6 percent), and food retailing (0.1 percent). Sales for department stores were the only category to record a decline, down 0.7 percent on the month.

The strength of sales varied regionally, with solid growth recorded in the two most populous states, New South Wales and Victoria, up 1.3 percent and 1.2 percent respectively. Sales in Tasmania also advanced 1.2 percent. Sales growth was weaker elsewhere, with Queensland, the third most populous state, recording a drop of 1.1 percent on the month.

Seasonally adjusted retail sales rose 3.8 percent in year-on-year terms in May, up from the 3.1 percent growth recorded in April.

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.