Retail Sales Sink As Consumers Close Wallets
One of the mysteries of yesterday’s market is why the shares in major retailers like Wesfarmers and Woolworths were not punished in the wake of the shockingly bad retail sales figures for August.
But they didn’t, their rose, as did shares in the other major grocery chain, Metcash, while shares in some specialist retailers eased a touch.
The Australian Bureau of Statistics reported that retail sales fell 0.6% in seasonally adjusted terms for the second month in a row when sales fell 0.2% in July.
While on a trend basis they were up 0.1%, after a similar rise in July that is hardly reassuring and has caused economists to start rethinking their views on third quarter GDP. The falls came after the sharp 1.65% jump in June and the 1.5% rise in the June quarter (which was the largest quarterly rise in more than three years.
It is as though consumers snapped shut their wallets and put away their credit and debit cards and have kept them hidden in the first two months of the quarter.
“It’s surprising that Wesfarmers and Woolworths haven't been sold off today," Karen Jorritsma, director of equity sales at Citi noted yesterday.
Wesfarmers, owner of Coles, finished the day 0.3% higher at $41.03 while Woolworths closed up 0.5% to $24.67. Shares in Metcash rose 1.6% to $2.49. Shares in JB Hi (down 0.7%) and Harvey Norman (down 0.5%) ignored that strength.
The seasonally adjusted fall of 0.6% in August, its sharpest monthly fall in more than four years.
Seasonally adjusted retail spending fell to $25.9 billion in August, missing market expectations of a rise from July of 0.3%. Household goods retailing fell one per cent in August, spending at cafes, restaurants and on takeaways dropped 1.3% 9a surprise given its resilience in recent years), and grocery sales were down 0.5 per cent.
Departments store sales rose 0.7% after being down in previous month.
Weaker-than-expected retail turnover will fears that consumers are shying away from spending because of rising household debt and continuing weak wages growth.
The ABS said that seasonally adjusted, "there were falls in all states and territories. "Victoria (-0.8 per cent) and Queensland (-0.8 per cent) led the falls," said Ben James, Director of Quarterly Economy Wide surveys.
"There were also falls in New South Wales (-0.2 per cent), Western Australia (-0.6 per cent), South Australia (-0.6 per cent), the Australian Capital Territory (-0.8 per cent), Tasmania (-0.7 per cent) and the Northern Territory (-0.7 per cent)."
“Compared to August 2016, the trend estimate rose 2.8%. Online retail turnover contributed 4.6% to total retail turnover in original terms.
Meanwhile we posted a seasonally adjusted trade surplus of $A989 million in August, compared with a surplus of $US808 million in July, according to the ABS’s monthly trade data released yesterday.
The value of exports rose 1.0% in August, while import growth remained flat. The surplus was supported by a 10% increase in the value of iron ore exports, but a 3% fall in coal exports capped the overall gains. The surplus was slightly wider than market forecasts for a surplus of $A850 million.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.