AU: Retail Sales

Wed Sep 06 20:30:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.2% 0.0% 0.3% 0.2%
Year over Year 3.6% 3.8% 3.7%

Retail sales in Australia were flat on the month (seasonally adjusted) in July after an increase of 0.2 percent in June, falling short of the consensus forecast of 0.2 percent. Seasonally adjusted retail sales rose 3.6 percent in year-on-year terms in July, easing slightly from 3.7 percent in June.

Weaker sales in household goods were the main factor weighing on headline growth in July. Sales in this category fell 1.7 percent on the month, with department stores and clothing/footwear retailers also recording weaker sales.This was partly offset by stronger sales for food and other retailing outlets.

The flat headline number in July reflects offsetting moves across the eight Australian states and territories Sales fell in four states and territories, including the most populous state, New South Wales, but rose in the other four, including Victoria, the second most populous state.

The weakness in retail sales in July is consistent with concerns about the outlook for household consumption made by the Reserve Bank of Australia at is monthly meeting earlier in the week. GDP data, also published this week, showed household consumption recorded stronger growth in the three months to June, but this was largely driven by household savings rather than income growth. The RBA cautioned that slow wage growth and high household debt will likely restrain household spending in the near to medium-term.

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.