The ABS has released its newest retail sales figures, revealing that sales stalled in July (in seasonally adjusted terms), coming under expectations for a 0.2% increase.
The result is the weakest since March, notably when Cyclone Debbie inflicted disruption to southeast Queensland and northern New South Wales area.
The decline was led by a fall in sales in department stores which slipped 2.8%.
Annual growth in sales consequently slowed to 3.6%, which is a drop from 3.7% in June.
Spending on discretionary items climbed 3.4%, falling from 3.9% which was reported in the year to May.
Sales of household goods dipped a notable 1.7%. The large drop follows sizable increases in the June quarter, which did include the replacement of damaged items after Cyclone Debbie.
The Bureau of Statistics revealed that sales jumped in Victoria (0.4%), Western Australia (0.6%), Queensland (0.2%) and the ACT (0.1%). A decline was felt in New South Wales (0.4%), South Australia (0.8%), Tasmania (0.9%) and the Northern Territory (0.1%).
Chief Australia and New Zealand economist at Capital Economics, Paul Dales, noted the results related to the current housing climate:
“The slowdown in activity in the housing market in recent months is playing a part, with spending on household goods falling by 1.7% in July”
“Within that, sales of furniture and other housewares items dropped by 3.5%”.
Mr Dales states that July’s weak results were generally broad-based, which casts doubt on whether the increase in Australian household consumption seen in the June quarter GDP will last.
“Indeed, the weak start to the third quarter suggests that the 0.7% rise in consumption in the second quarter may be followed by a smaller rise in the third quarter, perhaps of around 0.4%”
“This tallies with out view that the acceleration in real consumption growth in the second quarter won’t mark the start of a sustained pick-up when households’ real income are hardly rising at all”.
Consensus is the results may indicate some downward results for September quarter growth.
