Australia: Feb retail sales dips 0.1% as discretionary spend falls - Westpac

Matthew Hassan, Research Analyst at Westpac, notes that Australia’s retail sales came in weaker than expected with a 0.1% dip in Feb vs expectations of a 0.3% gain.

Key Quotes

“That followed a 0.4% gain in Jan but a weak finish to 2016 with monthly sales essentially flat through Nov-Dec.”

“That early flat patch mainly reflected the wind down of the Masters home improvement chain impacting on household goods retail.”

“The latest weakness however is more broadly based and spread across most non-food categories – household goods retail down 0.4%, clothing down 2.5%mth, cafes & restaurants and ‘other retail’ both flat.”

“Indeed whereas basic food retail sales were up 0.3%mth, non-food retail as a whole was down 0.4%mth. That pattern is a signature sign of consumer ‘belt-tightening’ with discretionary spend reined in and ‘switching’ giving support to staples.”

“The state breakdown also pointed to broad-based softness associated with weak incomes: NSW sales up 0.4%mth but Vic down 0.3%mth, Qld down 0.2%mth and WA down 0.7%mth.”

“Overall, the pattern is consistent with spending restraint associated with income pressures and increased caution.”