Retail sales figures have been lacklustre for the past couple of years despite a falling savings rate. Economists have explained the low growth rate as a result of record household debt and modest income growth. While sales figures for three out of the last four months have beaten expectations, some larger monthly figures will be required before economists call an end to the down-trend.
Total retail sales beat expectations again in May as total retail sales grew by +0.4% over the month, seasonally adjusted. On a year-on-year basis, sales grew by 2.5%, down from April’s 2.7% annual rate.
The better-than-expected increase followed an upwardly-revised growth rate of 0.5% in April and a flat result in March. The median market expectation was for a +0.3% increase but local markets did not pay a lot of attention and some bond yields slipped. Yields on 3 year bonds remained unchanged at 2.07% while 10 year bond yields lost 3bps to 2.60%. The Aussie was almost unchanged at 73.80 US cents.
The “cafes and restaurants” segment fell by 1.0% while “other” sales were essentially flat. All of the other categories recorded increased sales, with department store sales providing the largest contribution.