Australia: Retail sales under pressure - ANZ

Jo Masters Senior Economist at ANZ, explains that Australian retail sales disappointed in February, suggesting that January’s solid rise was just a temporary boost.

Key Quotes

“Sales were particularly weak in clothing & footwear and furniture sales, which suggests to us that the impact of foreign retailers continues to weigh on the sector. Disappointingly sales fell in Victoria despite ongoing strong house price growth. Consumer confidence around personal finances has slipped in recent months and together with intense competition suggests that retail sales may remain lacklustre for some time.

• Nominal retail sales disappointed, falling by 0.1% m/m in February. In annual terms, retail sales rose by 2.7% y/y, the weakest result since mid-2013. In three month-end annualised terms, retail sales were up just 1% in February.
• Clothing and footwear sales were particularly weak, falling by 2.5% m/m and are now only 0.8% higher than a year ago. Household goods sales also fell in February, driven by a 2.6% m/m fall in furniture, floor coverings, houseware and textile goods sales. 
• Sales rose in food and department stores, and were flat in cafes, restaurants and take away food as well as the ‘other’ category.
• Sales were weak across most of the states, with only NSW (+0.4%), SA (+0.1%) and NT (+0.4%) seeing higher nominal sales in February. Disappointingly, sales in Victoria fell by 0.3% m/m. While retail sales in NSW are running at 3.3% y/y, annual growth in sales in Victoria has slipped to 2.6% y/y from 3.8% y/y in January. 
• Somewhat encouragingly, sales at large stores were flat in the month, with the weakness concentrated in small stores (where sales tend to be more volatile).”