Summary: Retail sales up 1.4% in November, more than double expectations; “a strong result”; largest influence on month from clothing sales.
Growth figures of domestic retail sales spent most of the 2010s at levels below the post-1992 average. While economic conditions had been generally favourable, wage growth and inflation rates were low. Expenditures on goods then jumped in the early stages of 2020 as government restrictions severely altered households’ spending habits. Households mostly reverted to their usual patterns as restrictions eased in the latter part of 2020 and throughout 2021, although not for all categories.
According to the latest ABS figures, total retail sales increased by 1.4% in November on a seasonally adjusted basis. The rise was more than double the 0.6% increase which had been generally expected and considerably more than October’s revised figure of 0.4%. Sales increased by 7.7% on an annual basis, down from October’s comparable figure of 17.9%.
“Although this is a strong result, it’s much weaker than November growth in 2020 and 2021, both of which benefitted from the perfect storm of post-lockdown spending spikes and Black Friday sales,” said ANZ senior economist Adelaide Timbrell.
Commonwealth Government bond yields moved a touch higher on the day. By the close of business, the 3-year ACGB yield had inched up 1bp to 3.38%, the 10-year yield had returned to its starting point at 3.74% while the 20-year yield finished 1bp higher at 4.10%.
In the cash futures market, expectations regarding future rate rises softened a little. At the end of the day, contracts implied the cash rate would rise from the current rate of 3.07% to average 3.215% in February and then increase to an average of 3.59% in May. August 2023 contracts implied a 3.825% average cash rate while November 2023 contracts implied 3.85%.
Retail sales are typically segmented into six categories (see below), with the “food” segment accounting for nearly 40% of total sales. However, the largest influence on the month’s total came from the clothing category where sales increased by 6.4% on average over the month and contributed 0.55 percentage points to the net result.
