While attention was on yesterday’s Reserve Bank interest rate decision, the retail trade and trade account reports provided no further clarity on the health of the wider economy.
Trade was the most bullish of all – another huge surplus of $4.9 billion (seasonally adjusted) with the February surplus being revised up to $5.1 billion.
That strength in the trade account has been due to higher prices for iron ore and LNG in particular and it is by far the best performing sector of the economy – much stronger than the labour market.
But it was the retail sales data – a rise of 0.3% seasonally adjusted (the same on a trend basis), after a 0.9% rise in February (up from the first reported 0.8%) according to yesterday’s report from the Australian Bureau of Statistics
On the face of the month of March was OK – not brilliant but the March quarter the reading in volume terms was much weaker – a fall of 0.1% which followed a flat December quarter and a 0.2% rise in the three months to December.
It was, in fact, the first fall in quarterly retail sales (in volume terms) since the September 2012 quarter.
The March quarter performance would have been much worse but for a 0.6% lift in NSW, partly offsetting falls in every other state and territory. The irony is that from August to January NSW had been dragging sales lower.
The ABS said in yesterday’s release that “Cafes, restaurants and takeaway food services (1.4 percent) and Food retailing (0.4 percent) led the rises with strength in food prices contributing to rises, especially in supermarkets and grocery stores.”
“Clothing, footwear and personal accessory retailing (1.2 percent) and Household goods retailing (0.2 percent) also rose. The rises were partially offset by falls in Department stores (-1.5 percent) and Other retailing (-0.4 percent),” the ABS said.
In seasonally adjusted terms, there were rises in Victoria (0.7 percent), Queensland (0.6 percent), New South Wales (0.2 percent), Tasmania (0.4 percent), South Australia (0.1 percent), and the Northern Territory (0.7 percent). The Australian Capital Territory was relatively unchanged (0.0 percent) and Western Australia (-0.7 percent) fell in seasonally adjusted terms in March 2019.
The RBA would have had time to consider the retail sales data at its board meeting yesterday – it came out at 11.30 am towards the end of the meeting, but the weak quarterly performance, in particular, was not enough to force a rate cut.
Consumers and homeowners will now have to wait until June to see if they will get a rate cut as the central bank gives itself time to assess the impact of the policies of an incoming Labor or Coalition government.
The March quarter national accounts and GDP data are not due until the day after the June meeting, meaning the bank could wait until July to deliver its next verdict on the economy’s performance.
