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November turned out to be an "above average" month for retailers, as shoppers brought forward their Christmas spending.
Key points:
- Retail sales lifted 0.4pc in November, which is a 2.8pc gain since last year
- Online sales were 6.6pc of total retail turnover during the month
- Economists forecast a drop in consumer spending, and weaker Christmas sales results
Retail sales rose 0.4 per cent to $27.1 billion during the month, seasonally adjusted, which coincides with the much-hyped Black Friday and Cyber Monday sales.
It was a slightly better-than-expected outcome, as Reuters-polled economists had predicted a 0.3 per cent rise in the official Bureau of Statistics (ABS) figures.
This brings retail sales growth to about 2.8 per cent in the past year, which analysts consider to be a lacklustre result.
"Household goods retailing (1.2pc) led the rises, while there was also a notable rise for clothing, footwear and personal accessories retailing (1.5pc)," said Ben Faulkner, acting director of Quarterly Economy Wide Surveys at the ABS.
"Both of these industries were impacted by strong promotional activity in the November month, including Black Friday sales."
Mr Faulkner said there were also slight increases for food retailing (0.2pc) and department stores (0.4pc), but declines for restaurant and takeaway services (-0.1pc).
The ABS observed the increases in November retail spending occurred in the Australian Capital Territory (1.6pc), New South Wales (0.8pc), Western Australian (0.6pc), Queensland (0.4pc) and Victoria (0.1pc), seasonally adjusted.
On the flipside, consumers cut back on shopping in the Northern Territory (-0.9pc), and Tasmania (-0.2pc), while spending in South Australia was practically unchanged.
Online continues to surge
As expected, there was a significant rise in online sales, contributing 6.6 per cent to total retail turnover in November.
The ABS noted that it was "highest level" of online retail sales figures it had ever collected.
It was certainly a significant jump compared to the same period last year (November 2017), when online sales were 5.5 per cent of total turnover.
"The value of online sales of electronic equipment over the four days from the US-inspired Black Friday to Cyber Monday sales was 205 per cent above the typical November daily spend," Commonwealth Bank chief economist Michael Blythe wrote in a note.
"On the same basis, clothing and footwear sales were up by 127 per cent, and furniture sales were up by 77 per cent."
December payback for November purchases?
However, strong November results means next month's figures, which includes pre-Christmas and Boxing Day sales, could be disappointing.
In recent years, there has been a rapidly growing trend for shoppers to do more of their shopping in November.
Data from the Commonwealth Bank's records of its customers' credit card usage shows sales across November, December and early January were considerably down on last year.
"The Christmas trading period looks to have been disappointing," Mr Blythe said.
"The cumulative dollar value of the Christmas spend in November, December and the early part of January was 3.7 per cent lower than the same period a year earlier."
While the November retail sales growth of 0.4 per cent was decent, it was substantially lower than the same period last year.
In November 2017, retail sales surged 1.2 per cent — but that was partially due to the enormous fanfare over Apple's release of its 10th anniversary smartphone, the iPhone X.
Weaker economic trends ahead
The November figures do not indicate there will be a major improvement for the Australian economy this year, according to several economists.
"While the data are not as soft as market participants feared, it's probably still not enough to offset concerns of a soft fourth-quarter outcome for consumer spending, given reports of a weak December period," said NAB economist Kaixin Owyong.
"Further signs of soft spending will make it difficult for the [Reserve] Bank to credibly maintain its view that consumer spending will pick up to around 3 per cent year-over-year."
Retail sales growth will average 2.5 to 3 per cent in the year ahead, according to AMP Capital's chief economist Shane Oliver.
His forecast is that consumer spending will be weighed down by slowing jobs growth, wages growth remaining weak and falling house prices — which creates a "negative wealth effect making households want to increase their saving rate".
The recent plunge in petrol prices should give households a temporary reprieve, boosting consumption by 0.5 per cent in the first half of 2019, said Marcel Thieliant, senior economist at Capital Economics.
"We still think that the outlook for consumption is downbeat," he said.
"All told, we believe that consumption growth will slow from 2.6 per cent in 2018 to 2 per cent this year."
Topics: retail, economic-trends, business-economics-and-finance, australia
First posted