Important feedback from Wesfarmers CEO Richard Goyder this arvo. From the AFR:
…Goyder has not seen the pick up in discretionary spending retailers were hoping for after the federal election and Target continues to disappoint.
…“There was a bounce a week after the election but now I would say it is back where it was,” Goyder told analysts on Thursday. “If anything I think business is finding it marginally tougher at the moment.”
He is holding out hope though for a decent Christmas but his comments are made with a high degree of caution.
No caution at the SMH however, where house prices are going to cure everything, even Mr Goyder’s circumspection:
…he says the environment is better now and said not to underestimate the ‘wealth effect’ of rising share and house prices.
Ah, the wealth effect, at least it’s working at the SMH. Perhaps forgivable given it is based in Sydney, bubble central. And it goes on:
Like the Wesfarmers chief, AMP chief economist Shane Oliver also sees bright days ahead for Australian retail:
- Retail sales growth has been poor for four years now reflecting a combination of consumer caution, falling wealth, “excessive” interest rates, the strongly rising $A, surging electricity prices, slowing income growth and job insecurity.
- With some of these factors now fading or set to fade, retail sales growth is likely to pick-up a notch next year. This should see growth pick up to around 4 to 5% pa from 2-3% over the past four years.
- This would be good news for the Australian economy as it would signal a broadening in the recovery in nonmining sector growth from just the housing sector.
- While it would add to confidence that we have seen the low for interest rates, for investors it will help underpin the share market via higher profits and support other growth oriented investments.
Never let the truth get in the way of a good story!
I expect a decent Christmas then a return to strong savings habits with retail sales growth a little better than this year, slightly ahead of income growth.
