Retail spending figure falls short of expectations in June

Retail sales growth was weaker than anticipated in June despite a sharp uptick in winter clothing sales.

June’s retail spending figure may have reflected caution ahead of the election.

Australian retail sales growth was weaker than anticipated in June despite a sharp uptick in clothing sales as wintry weather finally arrived.

Official numbers from the Australian Bureau of Statistics revealed a 0.1 per cent lift in seasonally adjusted June sales, shy of expectations for a 0.3 per cent gain and last month’s 0.2 per cent advance.

For the three months to June 30, retail sales lifted a modest 0.4 per cent, short of analyst projections for a rise of 0.5 per cent.

Capital Economics assistant economist Kate Hickie said the numbers showed “little momentum” heading into the second-half of the year.

“The weaker-than-expected rise in real retail sales in the second quarter points to a slowdown in consumption growth and adds to the growing evidence that June quarter GDP growth weakened significantly, perhaps to less than 0.5 per cent quarter-on-quarter,” she said.

Such a fall would represent a major slowdown from the quarterly growth rate of 1.1 per cent seen in the three months to March 31.

The June quarter numbers are due on September 7.

Ms Hickie did, however, note the prospect of consumption growth falling further in the third quarter was unlikely given rate cuts from the RBA in May and August would boost disposable incomes.

There were hints of deflation in the grocery sector once again as food retailing numbers declined 0.6 per cent on the month.

The sector was the worst performer of those surveyed by the ABS, with falls also seen in cafe, restaurant and takeaway food sales as well as in “other retailing”.

These declines were offset by a sharp 3.5 per cent surge in clothing, footwear and accessory sales as well as a 0.7 per cent lift in department store sales and a 0.3 per cent rise in household goods retailing.

It represents a sharp recovery for the clothing and footwear sector after sales skidded 1.2 per cent in May thanks largely to an unseasonably warm end to autumn.

On a state-by-state basis, Queensland shone with a 1.1 per cent jump in retail sales, while Western Australia saw a rise of 0.1 per cent. The action is significant given the two primary beneficiaries of the resources boom have been lagging the broader economy in the past 18 months.

Turnover falls were recorded in Victoria (-0.1 per cent), New South Wales (-0.2 per cent), Tasmania (-0.2 per cent), the ACT (-0.6 per cent) and the Northern Territory (-1.1 per cent), while sales in South Australia were flat.

Online retail turnover lifted to 3.4 per cent of sales, from 3.2 per cent in the prior month.

The Australian dollar briefly fell back to the US76c mark on the news, before quickly rebounding to US76.2c as investors digested the breakdown of the survey. Ahead of the release the local unit was trading at US76.07c.