Retail sales fall flat in July as department stores weigh heavy

Department stores have weighed on retail sales, as the indicator once again fell short of market expectations.

Shoppers in a H&M store in Sydney.

Australian retail sales were flat in July, falling well short of forecasts and showing a lacklustre winter period for the crucial sector of the economy.

The level result on a seasonally adjusted basis follows a modest 0.1 per cent gain in the prior month, the ABS reported.

In both months the market had been expecting an uplift of 0.3 per cent, although the Australian dollar held up despite the latest disappointment.

At 11.35am (AEST), the local unit traded at US75.36c, up from US75.32c just prior to the release. It briefly dipped to US75.2c before bouncing as traders also digested official capital expenditure figures.

The unchanged reading on retail turnover came as household goods retail and department stores weighed, with declines of 0.7 per cent and 6.2 per cent for the month.

The weakness in these two sectors was offset by positive showings from food retailing, cafes and restaurants, and clothing, footwear and personal accessories retailing.

On a state-by-state basis, positive readings were seen in every region bar the two most populous states, with NSW and Victoria seeing sales shrink 0.2 and 0.6 per cent, respectively.