Despite the Australian central bank's rate cut in May, the retail sales have been quite disappointing in May to post a lackluster 0.3% rise against forecasts at 0.5%. The RBA's May rate cut and an upright bounce in consumer sentiment was to drive a somewhat better gain.
Instead the 0.3% gain means trend sales growth, having achieved no great heights to begin with, is again slipping lower. At 0.2%mth, trend sales growth is tracking an annualised pace of just 3%.
What highlighted in retail trajectory is shown in the detail:
Food (+0.7%mth) and household goods (+0.9%mth) posted better results after a flat April, but this was offset by weakness in clothing (-0.8%mth).
Department stores (-1.4%mth) and to a lesser extent cafes & restaurants (-0.2%).
The mix implies a softening in small-ticket discretionary spending but renewed momentum in big ticket spending, led, not surprisingly, by housing related spending.
Again unsurprisingly, New South Wales led the monthly gains by state with a 0.7%mth rise vs a 0.2% gain in Queensland, a 0.1% dip in Victoria and a 0.2% dip in Western Australia.
Large retailers continue to outperform with sales up 0.7%mth, 6.4%yr compared to a -0.5%mth dip for small retailers with annual growth slowing to 1.5%yr.
The result adds to a disappointing loss of momentum through Mar-Apr. June may see more of a lift with Budget measures aimed at stimulating small business investment reportedly generating stronger sales in some segments ahead of the end of financial year.
Retailers should also be seeing some benefit from the lower AUD which has realigned tourism flows more in their favour - both inbound and outbound.
