So the economy is in a strange place.
On the one hand inflation is starting to concern the Reserve Bank, but house prices are falling, demand for money is soft (but rising for business), employment is running strongly and we know there’s an investment boom surging, despite floods and cyclones.
Rural Australia is doing very well with a good season expected after a solid one in 2010, but overshadowing it all is the strength of the Australian dollar, even though it has retreated from 30 years highs this week.
And now we find an unexpected slump in retail sales in March of half a per cent, after a revised upwards rise of 0.8% in February.
The bureau also reported that retail spending was flat in the March quarter in seasonally adjusted volume terms. Economists had forecast a rise of 0.5%.
All up the turnaround has been 1.3%, a significant move, and has significantly increased the chances that the economy contracted in the March quarter, especially when the poor trade figures and impact of the floods are factored in.
The Reserve Bank is expecting a contraction and will look through those figures, but the fall in retail sales probably wasn’t on the agenda.
It was the first fall in five months (there was an 0.9% fall last October) and shares in major retailers were immediately hit by the data, falling between 1% and 2% in midday trading yesterday.
Retail trade fell in the month to a seasonally adjusted $20.457 billion, compared to an upwardly revised $20.554 billion in February, the Australian Bureau of Statistics said yesterday.
Analysts had expected retail sales to rise 0.5% in March.
The static growth in the March quarter came after a fall of 0.4% in the December quarter 2010 and a rise of 0.5% in the September quarter 2010.
The ABS said that in the March quarter 2011 there was some growth in the sector with seasonally adjusted volumes higher in food retailing (0.6%), other retailing (1.5%), department stores (0.2%) and clothing, footwear and personal accessory retailing (0.2%).
But there was a fall for household goods retailing (-1.3%) and cafes, restaurants and takeaway food services (-0.6%).
The dollar dropped on the news, falling more than half a US cent as low as $US1.0707 from $US1.0770 before the announcement.
It went under $US1.06 overnight on the commodity rout, but bounced back over that level in Asian trading Friday morning.
The ABS said that turnover fell in department stores (-3.0%), food retailing (-0.4%), household goods retailing (-0.3%), other retailing (-0.1%) and cafes, restaurants and takeaway food services (-0.1%). Turnover rose in clothing, footwear and personal accessory retailing (0.1%).
The impact of the floods was also clear in the retail sales data with sales in Queensland jumping 3.2% in February as damaged goods were replaced, only to slump 2.9% in March.
Turnover also fell in Western Australia (-0.4%), New South Wales (-0.1%), Tasmania (-1.4%) and the Australian Capital Territory (-0.3%).
Turnover rose in Victoria (0.9%), South Australia (0.3%) and the Northern Territory (0.3%).
The ABS said that in the March quarter 2011, the retail sales in seasonally adjusted estimate volume terms rose in Western Australia (3.1%), Queensland (0.7%), the Northern Territory (4.3%) and the Australian Capital Territory (0.5%). They fell in Victoria (-1.4%), New South Wales (-0.3%), Tasmania (-1.5%) and South Australia (-0.1%).
So again a mixed picture.
Other data out yesterday showed approvals to build new dwellings jumped 9.1% in March, but that follows sharp falls in the previous two months in part due to flooding in Queensland.
Total approvals fell 8.1% in January, 22.2% in February, but bounced back 26.8% in March, to drive the national figure higher, according to the ABS Building Approvals data.
March’s rise was far stronger than the 5.3% fall in February and 10.7% fall in January.
Private dwelling approvals fell 0.8% as private other dwellings (home units, townhouses etc) leapt 70%.
The ABS said the dwelling approvals increased in March in Victoria (26.8%), New South Wales (8.5%), Tasmania (5.8%) and Western Australia (3.4%) while South Australia (-22.5%) and Queensland (-15.0%) recorded falls.
In seasonally adjusted terms, approvals for private sector houses fell 0.8% in March with falls in Western Australia (-8.4%), New South Wales (-5.6%) and South Australia (-2.1%) while there were rises in Queensland (8.2%) and Victoria (3.7%).
The value of total building approved rose 20.8% in March in seasonally adjusted terms.
The value of total residential building rose by 3.9% while non-residential building rose by 47.6%.
