The momentum of Australia’s retail sales has definitely decelerated in the past three months. In February, the nation’s retail sales were flat and weaker than expected. This is the third continuous month where Australia has recorded below expected data. Retail sales, on a three month-end annualized basis, decelerated from November’s 5.4% to only 1.5% in February. On an annual basis, retails sales grew just 3.3% in February, the weakest annual growth since September 2014.
The slowdown in momentum was seen in sales throughout a series of sectors. Non-discretionary and discretionary year-ended spending growth is slowing. Also, strength in goods and clothing sales is also decelerating. On a three month-end annualized basis, sales declined to 8.9% in February, from January’s 12.5%.
Region wise, WA and QLD recorded the softest retail sales data. Sales in QLD declined 0.4% on a month-on-month basis in February. Meanwhile, NSW and VIC recorded flat sales growth along with weak house price growth. The two states contributed 2.5% to year-ended growth in February. According to a previous report of ANZ, when growth on house price decelerates, consumer spending accelerates rarely.
Private consumption now bears the weight to pull up the overall growth more than trend; however, the recent data of retail trade warns that the private consumption strength witnessed in Q4 might not have been sustained, according to ANZ. Consumers are facing several headwinds such as weaker growth of house price, slow growth of wages and an expected moderation of job growth. Moreover, consumer confidence has been affected recently by domestic political landscape, added ANZ.
