Black Friday Sales Stimulated Retail Sales in November 2019, Revealed ABS

Amidst the ongoing geopolitical tensions, optimistic retail turnover data has strongly been grabbing investors’ attraction.

Recent update by the ABS has demonstrated that the country’s retail sales improved by 0.9 per cent in seasonally adjusted terms in November 2019, following a surge of 0.1 per cent in October 2019 and an increase of 0.2 per cent in September 2019.

The improvement in retail sales surpassed the analysts’ forecast of 0.4 per cent advancement.

Even in trend terms, the country’s retail turnover surged by 0.3 per cent in November 2019, following a rise of 0.3 per cent in October 2019.

Retail sales account for a major part of economic activity and is a primary gauge of consumer spending. The latest retail sales data reflect that the consumers’ spending has improved significantly in November, lifting retail turnover.

Strong Retail Sales in November 2019

As per the ABS, the improvement in retail turnover figures was observed in the following industries:

• Department stores increased by 3.4 per cent,
• Clothing, footwear and personal accessory retailing rose by 3.1 per cent,
• Household goods retailing surged by 1.2 per cent,
• Cafes, restaurants and takeaway food services jumped by 0.9 per cent, and
• Food retailing jumped by 0.5 per cent.

The rise in these industries was partially offset by a fall in other retailing, that declined by 0.5 per cent in November 2019.

In addition, the state-wise data showed a rise in retail turnover in all Australian states except the Northern Territory, where it fell by 0.2 per cent in seasonally adjusted terms.

Other states, including South Australia (1.4 per cent), Queensland (1.2 per cent), Victoria (1.1 per cent), the Australian Capital Territory (0.7 per cent), New South Wales (0.7 per cent), Western Australia (0.5 per cent) and Tasmania (0.4 per cent) observed a rise.

NAB Online Retail Sales Index Rebounded in November 2019

The NAB Online Retail Sales Index recently announced by the National Australia Bank Limited (ASX:NAB) indicated that online retail sales improved by 62 per cent in November 2019 amidst the Black Friday sales.

Overall, the online retail sales improved by 2.4 per cent month-on-month and 9.6 per cent year-on-year in November 2019.

Takeaway food recorded the strongest growth in online sales, followed by department stores, fashion, and personal and recreational goods.

NAB data demonstrated a slower month-on-month rise in homewares and appliances category, which improved by just 1.9 per cent.

In line with the ABS results, NAB online sales data also showed that all states and territories recorded sales growth, except the Northern Territory. NAB estimated that people spent $30.14 billion on online retail in the 12 months to November.

In addition to Australia’s retail turnover, the US data on consumer spending gauged investors’ attention in the international market. The recently released Bloomberg's index of consumer comfort showed that the US consumer comfort improved to 65.1 in the week ended 5^th January 2020 amidst easing US-Iran tensions.

What led to a Rise in Retail Turnover?

The rise in retail turnover was particularly driven by the sales on Black Friday that occurred on 29^th November 2019, strengthening consumer spending. The sales boosted across multiple segments, including electrical goods, clothing, furniture and online sales.

Black Friday sales offered a much-needed lift for retailers who were struggling in stagnant real wages and record-high household debt environment. Consumers took advantage of enormous discounts to make purchases for the Christmas holiday season, stimulating retail sales.

The Black Friday sales led to a substantial rise in the shopping figures relative to the last years amidst major sales events.

However, the market experts are of the opinion that the improvement in November retail sales is likely to drag December and January figures, with many retailers already complaining of lower sales subsequent to Cyber Monday (2^nd December 2019).

Moreover, experts suggest that the retail sales’ gain in November were temporary and the Australian households continue to remain concerned over the weaker economic outlook, which is likely to drag consumer spending going forward.

Market analysts expect the December retail sales figures to remain poor due to a slump in consumer sentiment after Black Friday sales and devastating bushfires. However, the experts anticipate the RBA to hold interest rates in February amid improving indicators, including property prices, job vacancies, dwelling approvals and trade surplus.

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