Simon Murray, Research Analyst at Westpac notes that Australia’s retail sales were flat in July and were weaker than consensus expectations of 0.2%.

Key Quotes

“This follows a revised June gain of 0.2% - downgraded from 0.3%, which was preceded by +1.0% and +0.6% in April and May respectively.”

“July’s soft outcome confirms that Q2’s rebound on a weather affected Q1 has faded, with the underlying fundamentals of weak wages growth and shaky consumer sentiment clearly weighing on spending.”

“The majority of the categories were disappointing but food retailing – the largest category – rose 0.7%. Department stores had another weak result (-2.8%) possibly evident of continued discounting and household goods fell 1.7% - a bit surprising given the strong growth in housing construction, with clothing, footwear & personal accessories also soft at -0.2%. A positive was other retailing up 1.3% with strength centred on other recreational goods, while cafes & restaurants eked out a gain of 0.2%.”

“By state, NSW fell 0.4% in an unseasonably warm July.  Tasmania (-0.9%) and SA (-0.8%) retraced recent gains, and NT fell 0.1%. WA bounced 0.6% but trend growth remains lacklustre, while Vic (+0.4%), Qld (+0.2%) and ACT (+0.1%) were a modest positive.”

“Overall, the result is indicative of constrained spending due to flat incomes as subdued wage growth offsets gains in employment, along with increased caution on the back of a slowing housing market and recent interest-only mortgage rate rises.”

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