Retailing had one of the best months of the year in July, led by solid sales for the still growing cafe and eateries sector, plus a solid rebound by department stores.
The Australian Bureau of Statistics said sales rose a seasonally adjusted 0.4% in July, after an 0.6% jump in June and the 0.3% fall in May (revised down from the 0.5% fall originally reported).
This confirms the improvements seen in the early weeks of the 2014-15 year by the likes of Super Cheap Group, Millers Fashion, Noni B and a couple of other small chains.
The AMP’s chief economist Dr Shane Oliver says the solid rise in retail sales for July "suggests the Budget hit to consumer confidence and spending has now faded. It also suggests that the contribution to September quarter GDP growth from consumer spending is off to a good start."
"More broadly, annual growth in retail sales at 5.9% year on year is continuing to run well above the 2.7% average seen over the 2010-2013 period".
He said that the "good start to the September quarter for retail sales and trade augurs well for September quarter GDP growth in that both are likely to provide an offset to a fall back in the contribution to growth from inventories”. (Inventories added 0.9% to GDP in the June quarter, after three consecutive quarters of detracting from growth.)
Retail sales momentum remaining solid
Source: AMP Capital
The ABS said the largest contributor to the rise were cafes, restaurants and takeaway food services, food retailing, department stores and clothing, footwear and personal accessory retailing.
These were partially offset by falls in other retailing and household goods retailing
The ABS said rises, seasonally adjusted, came from cafes, restaurants and takeaway food services (1.4%), food retailing (0.5%), department stores (1.9%) and clothing, footwear and personal accessory retailing up 0.1%). Falls occurred in other retailing (-0.6%) and household goods retailing down 0.2%.
In trend terms, which are designed to smooth out the month to month fluctations, food retailing rose 0.3%, household goods retailing (0.2%), cafes, restaurants and takeaway food services (0.1%). Falls (in trend terms) were recorded by clothing, footwear and personal accessory retailing (-0.4%), Department stores (-0.2%) and other retailing (-0.1%) fell in trend terms in July 2014.
Sasonally adjusted sales rose in NSW (0.7%), Victoria (0.6%), the Australian Capital Territory (2.6%), South Australia (0.4%) and Queensland (0.1%). The Northern Territory (-2.3%), Western Australia (-0.1%) and Tasmania (-0.4%) fell in seasonally adjusted terms in July 2014.
On a trend basis, Australian retail turnover rose 0.1% in July 2014 following a rise of 0.2% in June 2014. Year-on-year, turnover rose 5.2% in trend terms (and 5.9% in original terms).
The ABS also said that its estimates of online retailing revenue in July was $591 million, up 31% from a year ago, but down just under 1% from the $597 million in June. This series is an experimental attempt by the ABS to estimate the size and impact of online retailing.
The Bureau said total online retailing revenue was worth around 2.6% of total retailing revenue in July, up from 2.1% in the same month of 2013.
In the market, The Reject Shop’s shares saw a surprise 2.1% rise to $9.62 yesterday. That nearly the combined falls of almost 2% over the five previous trading days. The shares rose in a market that was weaker all day and down 30 points or 0.6%.
