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Friday, 6 February 2015

Retail volumes increase in Q4

Late run...

Well, it's Friday, it's afternoon, and I should be doing something more fun. 

But instead...let's take a run through the Retail Trade figures for December instead in four short parts!

1 - Small retail gains for the month

Retail turnover increased to a new all-time high of $23,806 million in December 2014.

Zooming in the chart shows that this was the 7th consecutive monthly gain.

However it was a moderate monthly increase of only 0.2 percent, perhaps vindicating this week's interest rate cut decision a little further.

Part 2 - State by state

The bulk of the retail turnover gains this month were seen in Queensland (+0.6 percent or +$30 million).

New South Wales (+$17 million) and Western Australia (+$14 million) also contributed solidly, offset by declines in the southern states of South Australia (-$7 million) and Tasmania (-$6 million).

An interesting point of note - New South Wales (32 percent), Victoria (25 percent) and Queensland (20 percent) combined made up well over three quarters of retail sales by turnover at 77 percent. 

From time to time theorists argue that there is no such thing as a "wealth effect" - rising house prices leading to increased consumer confidence.

However, they're wrong. 

New South Wales (+7 percent) and Victoria (+4 percent) have led the way for some time in terms of retail turnover gains, reflective of the very strong Sydney and Melbourne housing markets.

Notably retail in South Australia and Queensland is starting to pick up as capital city housing markets in those states improve.

Part 3 - Economy

In real chain volume terms the quarterly result was solid at +1.5 percent, and thus it seems likely that consumption will contribute to GDP in the fourth quarter after a conspicuous blip for retail trade in Q2.

New South Wales has comfortably been the most robust economy in terms of its ongoing quarterly contributions.

But interestingly South Australia has appeared from nowhere in recent months to record stronger volumes.

Part 4 - Industry groups

The most significant gains this month were seen in clothing and footwear (+2.7 percent).

Over the past year there has been an enormous near double-digit surge in the consumption of household goods, also reflecting the strength of the two largest housing markets.

Eating takeaway or restaurant food has been a popular pastime over the past year - actually, the  past decade - and as usual, people continue to, um, buy food as well.

Department stores are struggling, the reasons for which you can probably assume for yourself.

The Wrap

A soft monthly result, but nevertheless it looks likely that consumption will contribute to GDP with a solid +1.5 percent gain in real chain volume terms.

At the state level the New South Wales economy has looked very strong indeed, but there are some signs of life in the retail trade of other states. 

Elsewhere, on Aussie share markets the ASX 200 (XJO) added 9 points to record its twelfth straight gain. Wow! 

What some of our pollies wouldn't do for a similar surge of confidence...