Retail sales fall 0.1pc in December

Retail sales flagged in December amid a slide in demand for household goods, stalling the sector’s 2016 momentum.

Christmas Shoppers in Brisbane‘s Queen Street Mall. Pic: Jack Tran

Australian retail sales flagged in the most crucial month of the year, with news of a dip in turnover marrying with several weak updates from the sector in recent months.

Official data from the Australian Bureau of Statistics revealed a seasonally adjusted 0.1 per cent fall in sales for December, as against market expectations for a rise of 0.3 per cent.

It represented the first negative print in a year and just the third since the middle of 2013.

News of the weakness hurt the Australian dollar, which lost US0.15c to US76.6c by 11.35am (AEDT).

The soft reading comes after the collapse of David Lawrence and Marcs last week, as well as weak festive season trading updates from Oroton and The Shaver Shop.

It also comes ahead of tomorrow’s meeting of the Reserve Bank of Australia board, which is expected to keep interest rates at a record low of 1.5 per cent.

The ABS also downwardly revised the November rise from 0.2 per cent to 0.1 per cent, revealing the extent of the lacklustre festive season trading period.

It completely stalls momentum for the sector after a strong run from August through October, with monthly gains of between 0.4 and 0.6 per cent.

“Looking ahead, the fall in nominal sales in December is worrying for 2017,” Capital Economics economist Kate Hickie said.

“While consumption growth is unlikely to collapse, we suspect it will slow from 2.7 per cent last year to 2.2 per cent this year due to persistently low wage growth and modest employment growth.”

Part of the weakness through December could perhaps be attributed to the closure of Woolworths’ Masters hardware stores after a period of heavy sales.

Household goods retailing served as the major laggard – down 2.3 per cent on the month – with the ABS noting a 6.6 per cent slump in the hardware, building and garden supplies subgroup.

The hardware subgroup had seen sales rise in each of the prior four months.

Among other sectors, clothing, footwear and personal accessory retailing turnover lifted 1.4 per cent, food retail sales climbed 0.5 per cent, cafes, restaurants and takeaway food services booked a 0.2 per cent rise and department store sales lifted 0.3 per cent.

Other retailing dipped 0.2 per cent.

The major drags on a state-by-state basis were the nation’s recent leading performers in the east, with sales sliding 0.4 per cent in Victoria and 0.3 per cent in New South Wales.

Also proving a drag was the ACT, with turnover weakening 0.7 per cent.

In contrast, sales rose 1.2 per cent in South Australia, 1.1 per cent in the Northern Territory, 0.6 per cent in Western Australia and 0.5 per cent in Tasmania.

Trade in Queensland was flat.