Australians spent more money on making themselves and their homes more presentable according to the latest retail sales figures for November. Increased spending on household goods (furniture, floor coverings, kitchen items and textiles) and “recreational goods, toiletries and cosmetics” accounted for almost all of the overall increase in total retail sales during the month.
In particular, smartphone sales were said to be a major factor. An Australian Bureau of Statistics representative pointed to iPhones 10 sales “and the increasing popularity of promotions in November, including Black Friday sales” as an explanation for the surge.
Total retail sales (seasonally adjusted) increased by 1.2% in November, after rising by 0.5% in October. On a year-on-year basis, sales grew by 2.9%, up from the 1.8% annual rate recorded in October. These latest figures mark the second month in a row in which the annual growth rate has accelerated.
The month-on-month increase was much more than the 0.4% increase which was expected and the Aussie dollar and bond yields jumped before easing off over the course of the day. 3 year bonds ended the day up 3bps at 2.18% and 10 year bonds finished 2bps higher at 2.74%. The local currency jumped from just above 78.40 U.S cents to as high as 78.80 U.S. cents before easing back to around 78.75 U.S cents.
ANZ senior economist Jo Masters thinks the retailing sector is still facing a tough environment but there are some positive signs as retailers have taken on more staff in the last nine months. “We don’t think this changes the story of a challenging retail environment, with soft demand for the most part and competitive forces weighing on prices. Interestingly though, while surveyed business conditions in the retail sector are below long run averages, 65000 retail jobs have been created in the past three quarters (concentrated in New South Wales and Victoria), with 62000 of those full-time, leaving jobs growth running at 4.7% annually.”
Westpac economist Simon Murray agreed with his ANZ counterpart with respect to the challenges the sector faces but he focussed on a possible change in Australian shopping habits. “Overall, the result reflects a strong consumer response to emerging sales events, namely the Black Friday sales…These relatively new events in Australia may be having a behavioural effect on the way consumers shop, postponing purchases in the lead up to expected discount intervals, and are yet to be fully reflected in seasonal adjustments to the data…That could result in increased volatility in retail sales data with Q4 bouncing back from a very soft Q3.”