For a moment yesterday the worry-worts and panic-heads in the markets swooned and the value of the dollar and the stockmarket slid after weaker than expected retail sales data for August was released.
It was an overreaction of the silliest kind. The 0.1% rise in retail sales was growth, not a fall, and in trend terms there was no change in the growth rate of 0.2% we have seen for the past three months.
There was nothing in the retail sales figures, or in the monthly house price data also released yesterday, to cause such a large and silly fall.
What seemed to upset some in markets was that the rise of 0.1% was well shy of the 0.4% forecast – did anyone stop to ask if that forecast was too high? Nope!
But the currency, which steadied around 86.80, then rebounded back over 87 US cents in trading overnight.
The sharemarket resumed its rise and ended 41 points higher on the first day of the month and the quarter.
But it won’t hold those gains with offshore markets down overnight and our market facing a 50point fall at the opening. And yet the Aussie dollar remained well over 87 US cents.
After the last few weeks of the September quarter, yesterday’s rebound after the retail sales figures were released showed a surprising level of strength in the market.
Department-store sales fell by 2.9% in August, the biggest drop since February, but that has long been a volatile area of activity and no indicator of the real level of demand in the nation’s shops.
In fact the value of goods sold in the country’s department stores is well under the value sold in the myriad cafes, fast food places and other outlets.
They saw a rise of 0.2% in the month from July. Food retailers lifted sales 0.2% and sales of clothing and footwear was also 0.3% higher.
The “other retailing” group, which includes sales of books, pharmaceuticals and cosmetics lifted sales by 1.6%, the biggest increase since February. Household goods retailers saw a fall of 0.8%.
Victoria saw an 0.7% rise in sales, Northern Territory (1.7% off a very low base) Western Australia had a rise of 0.1%. Sales in Qld (down 0.6%) and NSW (down 0.1%) were the negatives.
The best indicator that retail sales remain on track was the 5% rise in trend terms in Australian turnover in August compared with August 2013.
That’s down from the 5.2% and 5.3% annual rates in the years to July and June respectively, but it is still faster than inflation. A year ago, annual trend retail sales growth was 1.7%, which was running behind inflation.
Retail sales largely on track
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And the latest monthly report from RP Data shows a small 0.1% rise in house prices in September and a slightly slower quarter when prices rose 2.9% across the capital cities, mainly driven by a still hot 4.1% rise in Sydney and a 3.7% jump in Melbourne. For September, Sydney, Brisbane and Adelaide saw price rises, the other capitals saw small falls.
