Retail sales figures have been lacklustre for the past couple of years despite a declining savings rate. Economists have explained the low growth rate as a result of record household debt and modest income growth. There is also the issue of the effect of price deflation. However, sales figures have now exceeded market expectations in four out of the last five months.
According to the latest ABS figures, total retail sales beat expectations again in June as sales grew by +0.9% over the month on a seasonally-adjusted basis. On a year-on-year basis, sales grew by 2.9%, down from May’s revised annual rate of 3.2%.
The better-than-expected increase followed an upwardly-revised growth rate of 0.9% in May and a +0.5% increase in April. The median market expectation was for a +0.3% increase but local financial markets were largely unaffected and Commonwealth Government bond yields and the local currency hardly changed. By the end of the day, yields on 3 year bonds remained unchanged at 2.15% while 10 year bond yields had slipped 1bp to 2.73%. The Aussie was a little higher at just under 74.00 US cents.
The “department stores” segment fell by 1.2% while the “other” segment was essentially flat. All of the other categories recorded increased sales, with department store sales providing the largest contribution.