December’s retail and January car sales slowed more than normal with new figures showing big falls in activity.
The Australian Bureau of Statistics reported retail sales in December fell 0.4% from November in seasonally adjusted terms, while industry car sales figures showed the lowest sales for January since 2012.
The data came out before the Reserve bank left interest rates on hold for a 27th meeting yesterday and maintained its optimistic view for future activity -although with some cuts to its key forecasts.
The ABS data shows that while spending on food rose (as expected) in December, there was a sharp 2.8% fall in household goods sales while clothing and footwear from by a rather large 2.4% from November.
Department store sales fell by 1.1% while the broad “other retailing” sector eased 0.1%.
Among the states, the largest fall was in NSW with sales there falling by 0.6%. It was the third time in the past four months that the nation’s biggest retail market recorded a 0.6% drop and more economists are blaming the continuing slide in house prices in the Sydney area.
Retail sales also dropped in Victoria, by 0.5%, Queensland (0.1%), the ACT (1.8%), South Australia (0.%), Tasmania (0.2%) and the Northern Territory (0.3%).
The only increase was in WA and even that was a small 0.1% rise.
Analysts had been forecasting a weak rise for December after anecdotal evidence pointed to consumers winding back their spending plans from late November. Some economists blamed the spate of late sales in stores and online (matching the US sales events such as Black Friday and Cyber Monday) for dragging demand forward from the tun up to Christmas.
Not only were sales down but the volume of goods sold were well short of expectations. Through the December quarter, retail volumes rose by 0.1%, pointing to a very weak contribution from households in the December national accounts to be released early in March. The December rise was less than the 0.2% rise in the three months to September.
The trend estimate for Australian retail turnover rose 0.2% in December 2018, following a rise of 0.2% in November 2018. Compared to December 2017, the trend estimate rose 3.2% according to the ABS.
Separate figures from the Federal Chamber of Automotive Industries showed that 81,994 vehicles were sold in January, a 7.4% drop on the same month last year.
It was the slowest start to the year since 2012 when 76,783 vehicles were sold in January of that year.
Chamber chief executive officer Tony Weber said the drop in sales was largely due to ebbing consumer confidence.
“The current economic environment is a challenging one, with an imminent federal election, a declining real estate market and tighter lending practices,” he said in a statement yesterday.
The Australian Industry Group’s performance of services index, released on Monday, showed a 7.8% drop in January. It fell to its lowest level since October 2014 and is now well down on the point at which the sector is expanding.
The data from the ABS and on services confirms the start fall in business conditions in January (and December) that the National Australia Bank’s monthly business surveys have been tracking since last April.
