Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Saturday, 6 August 2016

Looking good, Australia!

Threads & treads

The mini-boom in household goods retail appears to be cooked, with clothing and footwear sales now picking up the mantle!

Overall, though, Retail Trade growth was weak in June, with only a +0.1 per cent gain in seasonally adjusted terms (and +0.2 per cent in trend terms). 

In volume terms retail trade increased by just +0.4 per cent in the June quarter.


Thus early indicators suggest that GDP growth in the second quarter of 2016 will be considerably weaker than what has gone immediately before. 

Year-on-year retail turnover growth in trend terms has slipped to sit some way below its five year average. 

State versus state

Queensland saw a seasonally adjusted  +1.1 per cent jump in retail turnover in June, but growth was anaemic or negative everywhere else around the traps, thus accounting for the weak national result.

A bit of a fizzer to see negative results for New South Wales and Victoria in June, especially given that the two most populous states have accounted for almost three quarters of growth over the financial year!

Over the past year - surprise, surprise! - retail turnover growth in percentage terms has been strongest in Tasmania (a long overdue recovery) and the ACT (new IKEA mania!), with New South Wales now just losing a bit of momentum after a barnstorming run.

The resources states have been doing it toughest over the past year.

Not in the mood for food

Unusually the value of food retail turnover has declined over the past quarter, and year-on-year turnover growth in this sector is at its lowest level since 2010.

Also unusually, for recent years at least, expenditure on cafes, restaurants, and takeaways also declined in June.

Perhaps the recent slide in the food retailing series is just a blip, and will right itself in time.

Or alternatively, perhaps more intense competition for Coles and Woolies in the form of discount retailers such as Aldi is driving down prices.

My guess is it's more likely to be the latter.

After all Australia didn't get to have one of the heaviest male populations in the whole wide world by going on crash diets (except Phil off Neighbours).

And it's more likely to be weaker prices rather than volume that are responsible for dud food retail turnover, since as a nation we generally aren't that prone to cutting back in order to live on lettuce and water (except Phil off Neighbours).

Of course, this dynamic could just as easily be a function of weak demand and downward pressure on supermarket prices globally, such as fruit and veg. 

In any event, with the surge in household goods sales also having tapered off - in part accounting for the recent slowdown in New South Wales - the overall result is weak recent growth in retail trade turnover.

Clothing and footwear retail turnover jumped by +3.5 per cent in June, to be very strongly higher over the past year.

Consumers enjoying their low mortgage repayments seem to be treating themselves to some new threads and treads!

Looking good, Australia!

The wrap

Overall, this was a big miss for retail trade, mainly due to negative food retailing turnover growth, which in turn implies a weak contribution to Q2 from consumption to add to a weak result from net exports.

Fortunately interest rates have been cut twice since the end of Q1.

It looks like those cuts will be needed!

I wouldn't be too quick to write off consumption growth in the largest capital cities, though - preliminary auction clearance rates reported for Saturday were very high on the back of rate cuts.