Retail Trade Shrinks To Lowest Point Since 2012
Retail trade shrunk to its lowest point since 2012 in February as consumer spending continues to shrivel up, according to an industry index report.
The latest Australian Industry Group’s (Ai Group) Performance of Services Index (PSI) reported a second consecutive month of falling retail numbers in the Australian services sector, which accounts for 80% of the economy.
Although the index reading improved 0.2 points from 44.3 in January it still remained below the 50-point mark, signalling that activity levels are contracting.
The report noted retail trade falling 2.9 points to 39.9, the lowest result since August 2012.
“The consumer-focused segments were largely contractionary with weakness in consumer spending across the majority of these sectors with retail and hospitality faring the worst,” said Ai Group Chief Executive Innes Willox.
“Consumer sentiment has fallen faster and more intensely than the business-oriented sectors as concerns around house prices, residential construction activity and the all-pervasive talk of slowing economic conditions take hold on consumer sentiment.”
Hospitality was the worst hit, contracting 6.4 points, with “negative (and deteriorating) results for sales, new orders, employment and deliveries,” the report said.
Ai Group attributed the continued contraction of retail trade and hospitality to “weak customer demand” as a result of extreme weather conditions across Australia.
“Services businesses reported weak customer demand in February due to extreme heat and drought conditions in some areas of Australia, flooding in others and a deterioration in consumer spending.”
The February results indicate that retail numbers could continue to lose momentum in early 2019, continuing the forecast given in the final half of 2018.
Read the full report here.