Australian retail sales plunge into recession

Today’s retail sales figures released by the ABS will subtract from the September quarter GDP when the national accounts are released early next month.

As noted earlier, seasonally adjusted monthly sales rose by 0.2% in the month of September to be up just 2.5% over the year, with a clear downtrend evident:

In quarterly real chain volume terms, retail sales fell by 0.1% in the September quarter, which was below the June quarter’s 0.1% rise:

Annual real retail sales plunged into recession at -0.2% – the lowest recorded level since the early-1990s recession:

Retail sales are a sub-component of household consumption, which is itself the largest component in GDP (circa 55%). It is volumes that matter for GDP, so as stated above the 0.1% quarterly decline will subtract from GDP growth.

That said, as the ABS has been at pains to point out, retail’s share of Household Final Consumption Expenditure (HFCE) has fallen significantly over the past 50 years as Australians spend a greater share of their incomes on services:

ScreenHunter_3590 Aug. 04 13.01

Historically, Retail Trade estimates contributed 55-60% of HFCE in the expenditure side of Gross Domestic Product (GDP). However, this coverage of HFCE has fallen over time as household expenditure patterns have gradually shifted from goods to services. As a result, Retail Trade now contributes approximately 30% of quarterly estimates of HFCE.

Therefore, the impact on HFCE depends more on what happens to the other components. Nevertheless, retail’s weakness portends another soft Q3 GDP print, especially when viewed in light of the weakness in other areas (i.e. dwelling and public investment).

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. China PlateMEMBER

    man now this on top of the sub 80% auction clearance rate in sydney at the weekend and that Melbourne cup rate cut is starting to look a goer

      • Speaking of opening “teh gates” – our population grows at 1.6% per year, meaning retail sales growth of less than this are negative.

        • Mining BoganMEMBER

          The most important point of all. Is it the new Australians who don’t buy or the old Strayans who have given up on life?

          • Most of the newbies are penniless peasants for whom getting a job with Deliveroo is the highest aspiration.

            ‘Skilled migration’

  2. More wage theft:

    three Bangladeshi nationals and one Indian national — were all international students when they worked

    They were paid a flat hourly rate of $12

    Six of the adult Australian workers were paid ordinary rates of more than $18 an hour and penalty rates of up to $46.31 on public holidays.

    https://www.abc.net.au/news/2019-11-04/crust-pizza-foreign-workers-underpaid-at-hobart-store/11668630

    More immigration means replacing all Aussies on $18/hour with foreigners on $12/hour.

      • Jumping jack flash

        Aussies have too much debt to be able to work for $12 and still eat.

        The original idea for the immigrants is that they were to be paid fairly and take on debt mountains like everyone else. That would have spurred on debt growth to infinity and beyond. Everyone would have been instantly rich from someone else’s (the new imported workers’) debt.

        That’s how a ponzi works, and the debt ponzi isn’t any different.

        What we got with the slavery and the wage theft was close to being good enough, but now it is turning into a much thornier problem very quickly.

        • I agree – pinging firms for wage theft undermines/is the death knell for the ponzi model (there is no longer any point in importing foreigners, and we suddenly have a problem with those that are already here).

          • Jumping jack flash

            You’re right!

            The big problem is that wage capacity can’t just be magicked up. If it could, we would have wage inflation already and everyone would be happy and there wouldn’t be any of these problems we now have.

            The wage capacity that was created by the introduction of slaves and then immediately stolen is gone, it has been used up – used to leverage debt which it is now merrily servicing for the next 30 years or more before it can be released (if and only if the debt stops, which it can’t).

            So the businesses start paying their slaves fairly, what does that actually mean?
            It can only mean a couple of things and none of them are very good.

            I reckon that as soon as our glorious leaders are let in on the secret, all this “stolen wages” guff will be dropped like a hot potato. A bit like the banking RC.

          • Yes, I’m very surprised that they have not thought to cover up the wage theft scandal…well, nobody accused any of the incumbents of being too bright.

  3. 15 hours ago

    Trains in Sydney are even more crush loaded than they were 12 months ago

    passenger loads of 150 per cent during the morning peak in March, up from 139 per cent a year earlier.

    The airport line recorded average loads of 148 per cent in March, up from 135 per cent a year earlier, due in part to a population boom in suburbs around the Green Square and Mascot stations.

    https://www.smh.com.au/national/nsw/crowding-on-trains-along-sydney-s-western-rail-spine-worsens-20191025-p534ao.html

    This must be the latest lie from the globalists:

    vert.bullet
    4 HOURS AGO
    Rubbish. The single largest source of population growth in Sydney is natural increase through births. The second largest is internal migration from elsewhere in NSW and interstate. You could cut overseas migration to zero and Sydney’s population would continue to increase.

    • So why add to the problem by having a high rate of immigration. They’re not going to regional NSW. These morons don’t think their arguments through.

      • Yep. And “internal migration from elsewhere in NSW” = immigrants who live in a village for a few years in order to get permanent residency and then move to Rouse Hill.

  4. Well I bought an iPhone, so I dunno why numbers are down, what did youse chunts do for the economy?

  5. Jumping jack flash

    No worries mate. The “wealth effect” will kick in any minute and take retail sales to new dizzying heights.

    Wages will leap again, and again!
    New fulltime positions will be created aplenty. Job ads will soar!
    There will be renewed prosperity like at no other point in time!

    The RBA just cut the interest rates, give it a chance. Any moment now.

  6. Got gifted a $250 myer gift-card. For the life of me I could not find a single thing I wanted to buy. I might just hold onto it until something breaks.

      • Yep you’re an unsecured creditor… buy something after Xmas at 50% off, choose something that will hold its value and you can keep it in the box and flog on Gumtree later. Like a good wool doona, classy bed sheet sets, set of good saucepans etc.

    • Mining BoganMEMBER

      See if they’re offloading any of the sexy mannequins. Reckon you’d get a couple of hotties for $250.