AU: Retail Sales

Mon May 07 20:30:00 CDT 2018

Consensus Actual Previous
Month over Month 0.2% 0.0% 0.6%
Year over Year 3.1% 3.0%

Retail sales in Australia were unchanged on the month (seasonally adjusted) in March after increasing 0.6 percent in February, falling short of the consensus forecast for an increase of 0.2 percent. Seasonally adjusted retail sales advanced 3.1 percent on the year in March, up slightly from 3.0 percent in February.

Weaker headline retail sales growth in March reflects month-on-month declines in all but one of the major categories of spending. Sales for food retailing, the largest category, rose 0.7 percent on the month after an increase of 0.3 percent in February, but sales fell on the month for household retailing, the second largest category, clothing, footwear and accessory retailing, "other" retailing, department stores, and cafes, restaurants and takeaway food services.

Sales advanced on the month in March in four of the eight Australian states and territories, including an increase of 0.2 percent in Victoria, the second most populous state. Sales fell 0.1 percent in the most populous state, New South Wales, and the third most populous state, Queensland.

Sales volumes also weakened in quarterly terms in the three months to March, up just 0.2 percent on the quarter compared with growth of 0.8 percent in the three months to December 2017. This weakness in sales volumes suggests that consumer spending will provide relatively little support to economic growth at the start of the year when preliminary GDP data are released early next month. This is also consistent with recent comments from the Reserve Bank of Australia expressing concern about the impact of high levels of household debt on consumer spending.

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.