Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Tuesday, 5 April 2016

Moths to a flame!

Retail flat

Another massive month of Retail Trade for the Australian Capital Terrirtory (ACT) as the good people of Canberra have continued to be drawn like moths to the IKEA flame since the "ready-to-assemble" household accessories retailer opened in the capital.

More than 12,000 locals turned out for the store opening day in November, and local retail turnover has been fairly blazing along ever since. 

At the national level retail turnoved increased by only +0.2 per cent in trend terms in February and was flat in seasonally adjusted terms at $24.84 billion. 

In trend terms retail turnover growth has slowed and now sits at around the half decade average at a little over +3.7 per cent. 

Retail turnover growth seems to be losing some of its momentum.

Industry groups

February was obviously a somewhat underwhelming month, with food retailing recording an unusual decline, and restaurant & takeaway expenditure also falling in the month.  

Over the past year the strongest contributions have come from department stores, clothing & footwear, and household goods, perhaps driven by established households enjoying a combination of low mortgage repayments and rising dwelling prices, at least in the larger capital cities. 

Historically household spend has not increased when house price growth moderates, so this slowing in momentum represents further ammunition for those expecting further interest rate cuts, particularly with wages growth presently soft. 

State versus state

In trend terms New South Wales, Victoria and Queensland all notched +0.2 per cent gains in February, while in seasonally adjusted terms it was the two most populous states which recorded the largest absolute gains. 

And Canberra! Another ripper month for the ACT sees the capital territory blazing to the top of the retail turnover growth charts, both for the past quarter and on an annualised basis. 

The wrap

Overall, a fairly uninspiring set of numbers, and another tick in the easing bias column. 

Futures markets are pricing an interest rate cut by the end of the calendar year, and analysts will be watching the wording closely when the Reserve Bank releases its Monetary Policy Decision later today.

Of particular interest will be comments related to the recent rebound of the Aussie dollar.

As we'll see later this morning in the International Trade figures, this won't have helped the dollar value of commodity exports, and a monthly trade deficit in the range of $2-3 billion is expected by consensus forecasts.