Retail stalls in July
The Retail Trade figures for July showed that turnover fell by 0.1 per cent on a seasonally adjusted basis, although continue to sneak up moderately by 0.2 per cent in trend terms.
Household consumption has been one of the brighter spots in the Australian economy over the past year, and a contributor to GDP growth, so this is not a particularly happy result.
That said, the retracement in July should be seen in the context of previous increases and may not be indicative of ongoing declines.
State versus state
At the state level the most populous states have driven the strength in consumption over the past year on the back of strong increases in dwelling prices, while resources regions (and therefore to some extent states and territories) have evidently been struggling by comparison.
Over the past year, retail turnover is up strongly in New South Wales (+5 per cent) and Victoria (+4.4 per cent) on a seasonally adjusted basis, while other states and territories have generally not fared reasonably well.
At the industry level the comparative strength in the retail sector has been driven primarily by a boom in the sale of household goods, as well as clothing and footwear.
Over the past decade or so, however, the most notable or stand-out trend has been the "dining boom" with a colossal increase in spend in the cafes, restaurants and takeaways sector, with turnover having doubled since July 2003.
Looking at the data on a quarterly and annual basis shows how important the rise in dwelling prices has been to the economy, with household goods by far the most robust sector.
Overall, a rather inauspicious start to the third quarter for retail trade!
But there are two more months of data to go in Q3 yet, and there are a few moderate indications from other sectors of the economy that growth over the third quarter may be somewhat stronger than the meagre 0.2 per cent we saw in Q2.
Let's hope so.
Let's hope so.