Australia’s retail sales beat expectations in February, grow at strongest pace since July 2017

Australia’s retail sales beat market expectations for the month of February, growing at the strongest pace since July 2017, with gains broadly based across sectors. New South Wales and Victoria again led the growth of these states benefiting from strong employment growth.

Retail sales rose 0.6 percent m/m in February, following an upwardly revised 0.2 percent m/m rise the previous month.  Encouragingly, retail sales rose by 3 percent y/y in February, up from 2.1 percent y/y the previous month and the strongest annual rate of growth since July 2017.

In trend terms, retail sales rose by 0.4 percent m/m, the strongest monthly rise since October 2016, with annual sales up 2.7 percent y/y in trend terms. Indeed, in trend terms, sales have clearly picked up from the weakness evident in mid-2017.

The strength in retail sales was broadly based, with all sectors showing a rise in sales. Department stores (up 1.5 percent m/m), household goods (1.1 percent m/m) and clothing & soft goods (1.1 percent) were particularly strong. Other retailing rose a soft 0.2 percent m/m, dragged lower by a sizable 5.7 percent m/m decline in newspaper and book retailing.

"While it’s encouraging that retail sales didn’t falter again, we remain cautious about the outlook given the challenges facing household balance sheets. Anaemic wage growth, record high debt, slowing house price growth and most recently a stalling in consumer confidence all act to offset the strength in jobs growth," ANZ Research commented in its latest report.

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