The Reserve Bank makes its first decision for 2012 on the level of interest rates today.
It could move rates any way, but there’s a sneaking suspicion abroad the central bank might sit on its hands after recent data from Australia, the US, China and especially Europe hasn’t been as gloomy as many analysts had forecasts.
But equally, a cut wouldn’t surprise.
But the tone of recent data has been very much upbeat, as the recent surge on major stockmarkets suggest, as well as the rise in the price of copper and the value of the Australian dollar.
Car sales remain solid, another sign consumers seem to be more positive than the headlines suggest.
So ignore yesterday’s retail sales headline figure of a fall of 0.1% in December and instead concentrate on the nitty gritty of the release from the Australian Bureau of Statistics and a couple of other reports.
The headline fall of 0.1% in the seasonally adjusted value of retail sales for December got the attention it didn’t deserve.
Market economists had been forecasting a rise of 0.3% for the month.
The ABS said retail trade fell in the month to a seasonally adjusted $20.885 billion, compared to a downwardly revised $20.909 billion in November.
The ABS said the 0.1% fall in December in retail sales (seasonally adjusted) followed a rise of 0.1% in November and a flat result for October, meaning retail sales were flat during the quarter. But in volume terms sales were up for the final three months of the year.
The ABS said that over the December quarter, retail sales rose by 0.4% to $60.773 billion in seasonally adjusted volume terms, which is slightly weaker than the 0.5% rise for the September quarter.
The ABS said the overall trend result (which attempts to smooth out month to month variations) was a rise of 0.1%.
Now while that’s hardly anything to boast about, it’s not the end of the world, as some writers and analysts would have you believe.
According to the likes of Coles, Woolies, Harvey Norman and David Jones, price deflation was a problem in the closing months of 2011, especially in areas such as fruit and vegetables (down 13% in the CPI data in the quarter), consumer electronics and clothing and footwear (imports costing less because of the impact of the high dollar value and price cutting in things like flat screen TVs by the likes of Sony, Samsung etc).
That means consumers have been buying more than the headline figures suggest.
It was a big headache for food retailers in the December quarter and in December, according to comments from Woolies and Coles last week with their latest sales figures.
The driver of the December fall was an 0.7% drop in the seasonally adjusted sales in food retailing.
But that contained the conflict: The ABS reported: “By industry subgroup, the trend estimate rose for Supermarkets and grocery stores (0.2%) and Liquor retailing (0.7%) and fell for Other specialised food retailing (-2.3%).
“The seasonally adjusted estimate fell for Other specialised food retailing (-8.3%) and Supermarkets and grocery stores (-0.1%) and rose for Liquor retailing (1.1%).”
So it looks like we drank a bit more, ate roughly the same, or ate out less, and enjoyed a quiet Christmas making online purchases (judging from anecdotal report).
Adding to the downward pressure was a 1.8% fall for the previously very solid cafes, restaurants and takeaway food services.
That means the value of retail sales for the month was undermined by weak sales in the food sector, including takeaways and restaurants.
But offsetting this weakness in food were better performances from a couple of problem sectors.
Department stores and footwear and clothing retailers did much better in December, after having some miserable months.
The ABS said, “These falls were offset by rises in Clothing, footwear and personal accessory retailing (3.5%), Department stores (1.1%) and Household goods retailing (0.2%). Turnover was relatively unchanged in Other retailing (0.0%)”.
That might have been driven by discounting, but there was also plenty of discounting much earlier in the year in these sectors to no avail as sales fell.
The ABS said the state to make the largest contribution to the fall was Queensland (-1.4%), followed by Western Australia (-0.7%), New South Wales (-0.2%), South Australia (-0.7%), the Northern Territory (-2.6%) and Tasmania (-0.1%). Turnover rose in Victoria (1.5%) and the Australian Capital Territory (1.8%).
“In trend terms, turnover rose 0.2% in December 2011. This follows a rise of 0.2% in November 2011 and a rise of 0.2% in October 2011.
“In volume terms, turnover rose 0.4% in the December quarter 2011, seasonally adjusted, following a rise of 0.5% in the September quarter 2011.
“In trend terms, Australian turnover rose 3.0% in December 2011 compared with December 2010,” the ABS said.
That also isn’t anything to write home about, but it’s not that bad given the damage dome at the start of the year from the floods in Queensland and Victoria and the damage done by Cyclone Yasi.
All three events influenced food prices in particular throughout the year, especially as the negative impacts faded by the December quarter.
And finally the ABS data doesn’t include car and petrol sales.
Car sales were solid in December, and again in January. In fact the industry data on car sales released last Friday shows that Jan
