Australian Shoppers refused to spend on themselves, retail sales fades

Australian retailers had a weak recovery in the month of January as shoppers cut back their spending on clothing, footwear and personal accessories amid the snailed Australian economy.

On Thursday, 7 March 2019, the government agency Australian Bureau of Statistics released Australia’s retail turnover figures for the month of January 2019. The data reported the rise of 0.1% in Australian retail sales in January 2019, up from 0.4% contraction in December 2018, but well below the expectation of a 0.3% rise. This result outline the weaker than anticipated growth underpinned by the sluggish consumer spending, majorly recorded in the Northern Territory region.

ABS Director of Quarterly Economy Wide Surveys, Ben Faulkner stated, the mixed outcome has been observed across the industries with a decent rise in Food retailing and cafes/restaurants services being offset by the decline in Department stores and personal item products like clothing, footwear and accessories.

The announcement came just after a day later the Australian government had presented the significant meltdown in the gross domestic product (GDP) which grew by 0.2% in the quarter ended 31 December 2018 compared to the 0.3% rise recorded in the previous three months period. Now, it is evident that Australia’s subdued economic growth recorded during the December quarter has continued to 2019.

The soft start has opened the door for a rate cut this year. It is expected that the entire first quarter of 2019 may end at the lower end, thereby adding pressure on the Reserve Bank of Australia to announce a rate cut and loose policy in order to scale-up Australia’s economic growth.

With respect to geographical trend, New South Wales, Victoria, Tasmania and South Australia has shown a decent rise of 0.7%, 0.1%, 0.4% and 0.1%, respectively, in retail turnover of January 2019. But Queensland, Western Australia, the Northern Territory and the Australian Capital Territory have recorded a downtrend with as massive as 1.2% decline in the retail sales of Northern Territory.

Consumption pattern underscores the slow-moving growth in wage coupled with higher household debts. Although household goods retailing has remained unchanged, the Departmental store turnover got slashed down by 2.1% in January. The contribution of online retail turnover to the total retail sales also stood unchanged in January 2019 compared to previous month. However, in January 2018, online retail sales have contributed 4.7% to total retail.

Moreover, In GDP report, the Government informed that fall in private investment had dampened growth in the quarter which is in line with the decline in construction industry value added, down 1.9%. Investment in dwelling fell by 3.4% however, household spending softened during the quarter recording the growth of 0.4%.

Bruce Hockman, Chief Economist for the ABS, explained: “Growth in the economy was subdued, reflecting soft household spending and a decline in dwelling investment.”

The report read that mining investment fell during the quarter because several projects have moved from the construction phase to the production stage. The Australian Government, however, continues its focus on investing in the healthcare industry to strengthen this largest contributor to economic growth.

On the back of escalating weakness in the Australian economy the Australian Dollar faltered again, declining to $0.702 on 7 March 2019.

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