Retail sales defy European gloom

By Leith van Onselen

The Australian Bureau of Statistics (ABS) this morning released the retail trade data for the month of May, which registered a solid bounce in retail sales that beat analyst’s expectations.

In seasonally adjusted terms, retail sales rose by 0.5% in the month of May and by 3.5% year-on-year – just ahead of both the rate of inflation and population growth. Analysts had predicted a rise of only 0.2% for the month. Last month’s retail sales were also revised upwards from a fall of -0.2% to a rise of 0.1%.

Below is a chart summarising the monthly and annual growth rates by industry on a seasonally adjusted basis:

As you can see, the growth in monthly retail sales were widespread with the exception of food retaling, which contracted slightly over the month. Our love affair with coffee and junk food has also continued, with ‘Cafes, restaurants & takeaway food’ growing the fastest over both the month and year.

At the state level, Australia’s resources capital – Western Australia – has again dominated, growing by an above average 1.1% over the month and by 10.0% over the year. By contrast, Australia’s manufacturing capital – Victoria – has experienced more moderate growth of 0.5% over the month and 0.6% over the year:

Overall, it’s a solid result, particularly in light of the ongoing ructions in Europe. The result also tentatively suggests that the -0.5% cut to official interest rates in early-May might have had an effect; although we need to wait for further data for confirmation.

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Comments

  1. Deus Forex Machina

    Good to see that maybe Monetary policy still has traction even in an age of Dis-leveraging.

  2. Monetary policy works with a significant lag…this has been proven by empirical research. Not sure why people keep forgetting this basic fact. This data is good on its own, and should be well supported as those rate cuts start to fully take effect.

    Can we assume that the data is just experiencing a “dead cat bounce” moment and will all turn ugly in the second half?

    • It’s been a pretty broad spectrum of strong domestic economic data over the last month.

      Do you think they all are symptomatic of a dead cat bounce?

      Honestly interested as to what you think would be the driver of a return to the slide. Europe?

      • >Honestly interested as to what you think would be the driver of a return to the slide. Europe?

        Europe, yes , but maybe something closer to home as well.

        State and Fed government budget tightening has the potential to put downward pressure on the economy. We’ll have to wait and see exactly what they manage, and how the private sector reacts, but the potential is there.

  3. Gee, the increased sales couldn’t be because virtually every single store has had a constant sale for the past 3-6 months, could it? I was wandering around Westfield Parramatta the other day, and pretty much every shop had a 50% off sale tag out the front.
    If you have some cash, it’s a great time to buy clothes and the like…

    • And guess what the “incompetent fools in charge” have just handed out a bit of cash, so I am sure that we will see a bounce in June / July

      It amazes me that no one has picked up on the “actions” of the “fools” that have been put in place to try to mask the impact of the carbon tax

      Think about all that has happened in the last month or two has been to boot the economy, I am sure that the RBA did not have to cut as much as it did, as well as the cash handout !

  4. Diogenes the CynicMEMBER

    Front loading of government benefits such as the “education school bonus” and family benefits for the carbon tax must have had an impact if my wife’s Facebook account is any indication – lots of Mums talking about spending those gov dollars now!

  5. So as a result of the interest rate decreases we have an increase in retail sales i.e. consumption.
    Whocouldanoed?

    We’re also getting a kick in building activity. Whether that is an aberration remains to be seen but clearly things are happening in the RE market that are quite opposite to what some of us (me included) originally believed would be the eventual outcome.

    So we are being successful in our aim of restoring the old economy without any attempt to change anything. Note also our CAD is rising again as a result.

    Some of us have copped a fair bagging here because we were suggesting this was a POSSIBILITY. However lower interest rates, especially negative RAT, TEND to lead to lower savings and more consumption. It’s just a question of degree at any time and how long it takes.

    Now we CAN keep on paying for this by selling assets for a few more years. I’m certainly part of that scheme!

    However is a nation where we no longer own anything the sort of nation we want for our kids? Is it the sort of nation we want now where we have unemployment because we don’t produce any d…ed thing and we over-consume?

  6. MsSolarFelineAU

    Europe’s problems have not smacked us in the head _yet_. And, yes, it’s going to hurt.