A decent theory for the blowout number in retail sales from the SMH blog:
Retail spending may have jumped sharply in January, but economists warn it is too early to say if the good times are back for retailers.
JPMorgan economist Ben Jarman says the figures are impressive but are surprising given the relativity weak jobs market and soft consumer sentiment. He says they may have been boosted by the timing of federal government payments, including the Schoolkids Bonus.
- Certainly the anecdotes we’ve heard from retailers have been that things were reasonable in January after a good Boxing Day to new year period.
- So we are a bit reluctant to say this is a return to the good old days of retail.
ANZ senior economist Felicity Emmett agrees the Schoolkids Bonus payments may have helped boost the figures.
- It does suggest there may have been some impact from those higher government payments.
- However, it also shows retail trade trending up quite convincingly as consumer confidence rises along with house and equity price rises.
- Consumers are feeling more confident with the economic outlook.
That is not borne out by ANZ’s own consumer confidence survey, which is fast approaching 2011 lows. Westpac adds that:
Seasonality issues deserve a word of warning. Pre and post Christmas spending patterns have been shifting over recent years – the seasonal drop-off month to month has moved from –25% a few years ago to –22%. These are ABS estimates though and subject to revision. Basically, when the seasonal pattern is shifting it can be difficult to pin-point how much of a monthly change is due to this shifting seasonality and how much is due to a bumper spend.
But concludes:
Setting this caveat to one side though the January retail sales figures are much stronger than expected and following the revised quarterly profile to total consumer spending, suggest momentum is stronger and has clearly carried into Q1. The aforementioned weakening in consumer sentiment is still likely to weigh on spending in the months ahead but may be more of a factor for spending momentum in Q2, depending also on how sentiment tracks in coming months.
Let ‘s see if the splurge last’s through the next few months before concluding households have thrown caution to the wind.
