The Executive Director of the Australian Retailers Association, Russell Zimmerman, said October data from the Australian Bureau of Statistics showing annual retail sales growth of 2.01% give “sobering pause for thought.”
Mr Zimmerman said the figures showed that whilst the ARA had rightly flagged issues in the retail sector during 2019, the latest data released this morning raised questions about the overall health of the Australian economy.
“I think that looking back over recent months – a gain here, a slip there, patchy trends and disappointing numbers – today’s retail figures show once and for all that consumer confidence really is low,” Mr Zimmerman said.
“You need to look beyond the retail sector on these numbers, which give sobering pause for thought,” he added.
Mr Zimmerman said that two months from Christmas, after tax cuts, reductions in interest rates and an above-CPI increase in the minimum wage, a month-on-month fall in retail spending in October of 0.03% was disturbing.
“As we said last month, the ARA has been very cautious about assessing retail trade data this year, and while we want to see retail spending kickstarted – which would have flow-on benefits across the economy in terms of confidence, jobs and tax revenues – that doesn’t seem to have happened,” Mr Zimmerman said.
Mr Zimmerman said that despite the disappointing numbers, there were still some positives to be noted.
“Queensland continues to power along, with year-on-year growth to October of 3.67%; what is pleasing to see is that Tasmania (4.34%), the ACT (3.53%) and even WA (2.97%) have recorded solid annual growth,” he said.
Mr Zimmerman said he remained optimistic that modern retail phenomena such as Click Frenzy, Singles Day, Black Friday and Cyber Monday – most of which fall in November – may yet see a spark in retail spending.
“What we see in these numbers is that spending on food – particularly in restaurants and on specialised items – has stayed ‘reasonably OK’ while the disappointing results have mostly affected discretionary spending, so it may be people have held back on those items for sales that are now annual events,” Mr Zimmerman said.
Mr Zimmerman also noted that some of the worst retail spending numbers recorded in October were in categories that had been performing relatively poorly compared to the rest of the retail sector for some time, such as newspapers and books and furniture.
“While we’re not happy with the overall result in October, the fact some of the bad news has come from areas we’ve been concerned about for some time now tends to underline our hope that the retail sales bonanzas in November may see a rebound in overall spending,” he said.
Mr Zimmerman said he encouraged Australians to spend up on gifts in the lead-up to Christmas, saying the confidence that would flow from rising retail expenditure would stimulate activity in other parts of the economy.
“Economic activity is as much about confidence as it is about anything, and – rightly or wrongly – what happens in retail is often read as a barometer of the health of the wider economy,” Mr Zimmerman said.
“In a sector that accounts for 20% of the Australian economy and employs 1.3 million Australians – one in ten jobs across the country – aside from having an enjoyable Christmas with a few extra trinkets this year, spending up ahead of the festive season will give the economy a shot in the arm it clearly needs,” he said.
“Buy that extra Christmas present for mum or dad; treat the kids to “just one more;” and buy yourself something you hadn’t planned on: every little bit helps, and it helps everyone in the end,” Mr Zimmerman concluded.
Monthly Retail Growth (September 2019 – October 2019, seasonally adjusted)
Cafés, restaurants and takeaway food services (0.44%), Food retailing (0.09%), Other retailing (0.00%), Household goods retailing (-0.16%), Clothing, footwear and personal accessory retailing (-0.77%), and Department stores (-0.78%).
Northern Territory (2.27%), Tasmania (1.41%), Queensland (0.39%), Australian Capital Territory (0.31%), Western Australia (0.16%), New South Wales (-0.18%), Victoria (-0.36%), South Australia (-0.52%).
Overall month-on-month sales growth: -0.03%.
Year-on-Year Retail Growth (November 2018 – October 2019, seasonally adjusted)
Food retailing (3.14%), Other retailing (2.80%), Cafés, restaurants and takeaway food services (2.65%), Clothing, footwear and personal accessory retailing (1.24%), Department stores (-0.20%) and Household goods retailing (-0.30%).
Tasmania (4.34%), Queensland (3.67%), Australian Capital Territory (3.53%), Western Australia (2.97%), Northern Territory (2.59%), New South Wales (1.47%), Victoria (1.31%), and South Australia (0.81%).
Overall year-on-year sales growth: 2.09%.