Australia’s retail sales fall in Q3, fails to meet market expectations

Australia’s retail sales volume growth was disappointing in the September quarter, and the solid June quarter was revised down a little. A pronounced saw-tooth pattern in quarterly sales has been evident for some time.

The data showed a 0.4 percent pick-up in retail prices in the quarter and, at 1.1 percent y/y, the strongest annual result since early 2017. The monthly nominal data showed a small 0.2% rise. Interestingly, there were diverse outcomes in NSW and Victoria, suggesting the house price declines in Sydney are biting more than in Melbourne.

In September, sales of clothing and soft goods fell 1.2 percent m/m, reversing recent strong results. Cafes, restaurants and takeaway food retailing were the strongest category, rising by 0.5 percent m/m to take sales in this category up 3.7 percent in the year to September.

Meanwhile, there continues to be a small discrepancy between discretionary spending , which was only 2.9 percent higher y/y, and non-discretionary spending, which was 3.9 percent higher y/y. This suggests households continue to focus much of their increased spending on the necessities.