Retail sales stagnate in October as shoppers stay home

PATRICK COMMINS
DECEMBER 5, 2019

The Australian

Monthly retail sales stagnated in October, official data showed, after growing by 0.2 per cent in the prior month and a day after the national accounts showed households’ thriftiness dragging on the country’s economic growth in the September quarter.

Thursday’s seasonally adjusted data from the Australian Bureau of Statistics will intensify concerns that a lack of spending will cruel even a gentle recovery after a sharp economic deceleration through the 2018-19 financial year.

Analysts had noted that the increasing popularity of last weekend’s Black Friday sales event may cause shoppers to delay consumption. Still, the consensus forecast had been for a 0.3 per cent lift in retail trade in October.

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“The disappointing retail sales outcome is yet another sign that consumers are under pressure,” NAB economist Kaixin Owyong said.

The ABS figures showed that Australians upped spending on eating out and takeaway food, which climbed 0.4 per cent for the month. Food retailing sales were 0.1 per cent higher.

In contrast, retail turnover in the clothing and footwear and department store categories dropped 0.8 per cent, and in household goods by 0.2 per cent.

The “other retailing” category – which includes spending on pharmaceuticals and toiletries and newspapers and books – was flat through the month.

By state, retail sales fell by 0.4 per cent in Victoria, by 0.2 per cent in New South Wales and by 0.5 per cent in South Australia. Queensland sales lifted 0.4 per cent in October.

The September quarter national accounts, released on Wednesday, showed households chose to save rather than spend billions in tax relief provided by the government’s low and middle-income tax offset. Consumption growth slowed to 0.1 per cent over the quarter, its slowest pace since 2008, despite a big boost to gross disposable household income.

“Weak October retail sales provide a worrying start to Q4,” Ms Owyong said.

Exports, and particularly a boom in mineral resources sales, has provided a powerful offset and, alongside government spending, supported overall growth.

Amplifying these countervailing economic impetuses, the ABS this morning also revealed Australia recorded a $4.5 billion trade surplus in October, down from the $7.2 billion surplus recorded in September.

The consensus among economists ahead of the release of the data was for the country’s trade surplus to ease to $6.5 billion.