Retail sales fall more than expected in January in wake of bushfires
Retail sales dropped in January as the full brunt of the bushfires put the brakes on spending.
Retail sales dropped 0.3 per cent in January as the full brunt of the Black Summer bushfires weighed on retailers in affected areas over the month, with the ABS warning that the global coronavirus epidemic will only begin to hurt sales from February.
The further drop in turnover came after a 0.7 per cent fall in December - downwardly revised from a 0.5 per cent drop - seasonally adjusted data from the Australian Bureau of Statistics showed.
By sector, in January there were 1.1 per cent falls in household goods and clothing and footwear retailing segments. Turnover at department stores fell 2.2 per cent, and takeaway food 0.3 per cent. Food sales lifted 0.4 per cent.
Some retail businesses in New South Wales, Victoria and the Australian Capital Territory, especially, reported a hit to turnover from bushfires and associated smoke haze, the ABS said.
The ACT suffered a particularly steep 2.3 per cent fall in retail turnover, but turnover dropped across all states and territories.
The statistics agency said “while some individual retail businesses reported reduced customer numbers attributed to COVID-19 there was no apparent impact on any of the aggregate level data included in this release”.
“It is expected that COVID-19 will impact aggregate retail trade estimates in coming months.”
ABS director of quarterly economy wide surveys Ben James said the fires had hurt trade for “a range of retail businesses across a variety of industries”.
“Retailers reported a range of impacts that reduced customer numbers, including interruptions to trading hours and tourism.”
On Tuesday Reserve Bank governor Philip Lowe rushed through a rate cut, to 0.5 per cent, as he warned that the uncertainty caused by the coronavirus was “likely to affect domestic spending”.
RBA deputy governor Guy Debelle told Senate estimates on Wednesday that the Black Summer fires would cut 0.2 percentage points off growth over the December and March quarters, and that the impact would be predominately felt in 2020.
Dr Debelle said it didn’t “look like the effect of the bushfires had all that much impact on the December accounts”.
“We expected, and still continue to expect, the impact to be larger in the current (March) quarter,” he said.”
The government’s China travel ban and ramping fears around the global spread of the coronavirus epidemic has slashed the number of incoming tourists, particularly from our largest trading partner.
ANZ economists warned that a decline in tourism related employment could weaken Australia’s already-anaemic household consumption growth.
Swiftly rising house prices over the second half of 2019 helped drive a pick-up in consumption in the final three months of last year, with some evidence that Australians may have spent some of the boost to incomes from three rate cuts and tax relief.
Wednesday’s national accounts, however, showed annual consumer spending growth remained stuck at 1.2 per cent, its slowest pace since the GFC and well down from the 2 per cent growth in 2018. After adjusting for population growth, spending declined.
The national accounts also revealed key measures of living standards dropped over the December quarter, including a 0.9 per cent quarterly fall in real net national household income.
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