Australia's retail sales rebound in January after two months of tepid outcomes

Data from the Australian Bureau of Statistics showed on Monday that Australia's retail sales rebounded in January after two months of tepid outcomes. Data showed retail sales rose 0.4 percent in January, in line with market forecasts and up from a 0.1 percent fall in the previous month. In annual terms, retail sales were up 3.1 percent y/y in January.

Jo Masters, senior economist at ANZ, called the January result a “solid start to the year”.

The rise was driven by a surge in sales in household goods and in cafes, restaurants and takeaway food services. Gains, however, were partially offset by falls in clothing, footwear and personal accessories, and department store purchases.

Sales at large stores rose a solid 0.8 percent m/m in January, while small store sales fell 0.3 percent m/m. Sales in Victoria were up 1.1 percent m/m following a fall of 0.5 percent in December, with the strength broad based. In NSW, sales rose a more modest 0.2 percent m/m in January, not quite reversing the previous months decline.

"It is still early days but, even if growth in retail sales were to remain at 0.4 percent month-on-month in the final two months of the first quarter, it appears that real consumption growth would still struggle to match the fourth quarter's 0.9 percent quarter-on-quarter rise," wrote Kate Hickie, Australia and New Zealand economist at Capital Economics in a note to clients.