Pete Wargent blogspot


'Must-read, must-follow, one of the best analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Markets & Economics Editor, Sydney Morning Herald.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Tuesday, 8 May 2018

Retail to contribute only marginally in Q1

Soft, soft, soft

After a decent start to the year retail turnover slunk marginally lower in March 2018 at $26.44 billion.

'A tad disappointing' you might say!

There's a bit of noise in the monthly numbers with the different timing of Lunar New Year, but year-on-year annual turnover growth improved just a little a bit to +3.15 per cent in seasonally adjusted terms. 

At the state level, only the ACT had a positive month, while over the year Victoria's solid economy has generated the most turnover growth, and Western Australia is still struggling to gain traction. 

And at the industry level food retailing is recording reasonable growth, and department stores are languishing. 

Online retail accounted for 5.1 per cent of retail turnover, up from 3.7 per cent only a year earlier.

The wrap

There is still plenty of evidence of competition and price discounting around, and very few indicators of inflation pressures, although the retail price deflator was a little bit more robust this quarter at 0.4 per cent.

Not sure I'd be declaring the end of discounting off the back of that one number, though. 

In real or volume terms, retail turnover increased by 0.2 per cent in the quarter, so will contribute only very marginally to GDP (+0.04ppts) growth this quarter, though non-retail spending may have fared a little better. 

Adding it up, household consumption in the first quarter of the year looks set to be quite a bit weaker than the three months before Christmas.

Overall the base effects don't look too friendly going forward, and we could see annual retail turnover sagging towards new cyclical lows in the coming months. 

In other news, stay tuned for the delivery of the Federal Budget tonight at 7.30pm.

Maybe some moderate tax relief for lower/middle income earners might help a bit here!