December’s Christmas season sales were flat, breaking a run of four straight monthly rises.
But while the December sales didn’t have enough firepower to produce a positive result for retailers, annual growth is still running at a healthy pace.
Non food retail sales recorded an outright contraction in December, down 0.3 per cent, Westpac economist Matthew Hassan said.
“(This was) led by sizeable falls in household goods and other retail – both bellwether discretionary categories,” he said.
“The report is particularly disappointing given the reasonably solid lead-in to the Christmas sales period from consumer sentiment and relatively upbeat reports from private sector business surveys.”
There were also stronger anecdotal trade reports, with the Retail Council predicting Australian punters would pour a massive $2.5 billion into retail coffers on Boxing Day alone.
However JP Morgan economist Tom Kennedy said monthly figures can bounce around based on price fluctuations, and the quarterly volume print was a better indicator of the retail industry’s performance.
Over the December quarter, retail sales rose by 0.6 per cent to $72.06 billion in seasonally adjusted volume terms, a little below the market consensus of a 0.9 per cent rise.
“The consumer was alive and well in the final quarter of last year, and we expect another reasonable contribution to growth from the household sector,” Mr Kennedy said.
He said there may also have been a late shopping surge in January where consumers stepped up their buying behaviour during post-Christmas sales.
“We’re still pretty optimistic on the outlook for the household sector this year,” he said.
“You’ve seen a fall in oil prices again in January. That’s going to boost consumers’ disposable incomes and that should lift consumption.”
Commonwealth Bank of Australia senior economist Michael Workman said annual sales growth is still running at a relatively healthy 4.2 per cent, which is just below the decade average of 4.5 per cent.
“Note that across all the categories annual growth rates are positive,” he said.
Total retail spending was $24.76 billion in December, up only slightly from $24.75 billion in November.