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AUD: Mildly disappointing run continues for retail sales - Westpac

FXStreet (Delhi) – Matthew Hassan, Senior Economist at Westpac, suggests that the Australian September retail sales report continued to show subdued conditions.

Key Quotes

“Sales rose 0.4% in the month, repeating August's soft growth read. The rise was in line with the consensus forecast but weaker than we had been expecting based on reported improvements in a range of private sector business surveys. Trend growth continues to track a 3-3½% annualised pace, well below the 4½% growth averaged over the last 10yrs.”

“Real retail sales (i.e. volumes) were up 0.6% for Q3 as a whole, again coming in below expectations, albeit only slightly. The main surprise for us was around the retail price deflator which posted a 0.3% rise vs expectations of a 0.1%. Trend growth in real retail sales is tracking a 2.4% annualised pace, below the 2.9% average over the last 10yrs.”

“The state breakdowns continues to show divergent conditions running with firmer growth in NSW, Vic, SA and Tasmania (running at 3.8%yr on a combined basis) compared to the Qld and WA (the mining states tracking a 1.8%yr pace on a combined basis).”

“Large retailers are clearly outperforming with sales flatlining across small retailers as a whole.”

“Overall, the September report was mildly disappointing given recent signs of a pick up in consumer demand. Although prospects for a near term pick up still look reasonable for some categories, retail sales overall is showing lacklustre growth with heavy price discounting still evident in many sectors despite the lower AUD. The Q3 result suggests total consumer spending will again post a subdued result in the Q3 national accounts with a 0.5%qtr gain now expected, holding annual consumption growth at 2.5%yr.”

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