Retail cactus as house prices fall

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The retail pain is only going to to intensify, from Damien Boey at Credit Suisse:

Very weak discretionary spending numbers

Yesterday, we learned that nominal retail sales flat-lined in March, below Consensus expectations for an 0.2% monthly gain. Real retail sales (ie volumes) also came in below expectations, rising by a modest 0.2% in 1Q, compared with expectations for an 0.6% gain. We think that Consensus arrived at its estimates by using the NAB cashless index (which had been pointing to moderate growth in March), and 1Q CPI data to deflate nominal sales.

Compositionally, discretionary spending was weak. Food retail sales rose by 0.7% in March, meaning that non-food spending fell by 0.5% over the month. Weakness was broadly-based across discretionary spending categories.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.