Retail Turnover – Digital Finance Analytics (DFA) Blog

More Signals For An OZ Rate Hike Incoming?

So now, in May, so before any tax cuts or other Government help has hit, Australian retail sales rose by more than expected with spending largely driven by discounts in the face of elevated borrowing costs, an outcome that further strengthens the case for an interest rate hike this year.

As a result, yields on policy-sensitive two-year bonds rose to 4.289% as rates traders boosted the odds for an interest rate hike this year. Stocks pared gains, with the ASX 200 closing still in the green, at 7,739.90.

Australian retail turnover rose 0.6 per cent in May 2024, according to seasonally adjusted figures released today by the Australian Bureau of Statistics (ABS), making it the biggest increase in four months, The outcome, which was double the pace that analysts forecast, follows a 0.1% gain in April and a 0.4 per cent fall in March 2024.

We should highlight that with population growth of around 600,000 in the past year, and inflation running circa 4%, we should absolutely be expecting to see retail turnover lifting, as people pay more the things they buy, and more people buy them.

All up, to me while there is a better tone to this numbers, many consumers remain under intense pressure, while strong population growth is working its “magic” in cushioning retailers from the worst impacts and are allowing them to retain and build margin. Other data suggests more vehicle sales slowed into the financial year end. The tax cuts might well given a further boost to sales, but potentially also to inflation.

The ASX Rate tracker is now seeing a high of 4.47% in November, and back to 4.35% in June next year. The bottom line is I think markets are correct in reading this as a reinforcing sign that rates may need to go higher to snuff out inflation. But is not definitive, yet as there is more data water to go under the bridge.

http://www.martinnorth.com/

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Digital Finance Analytics (DFA) Blog

More Signals For An OZ Rate Hike Incoming?

00:00 / 00:11:53

More Signals For An OZ Rate Hike Incoming?

The New Deputy Governor at the RBA said last week, that when it comes to a rate decision, they look at many different measures, apart from the recently released monthly series which showed a lift to 4% last time around in May.
So now, in May, so before any tax cuts or other Government help has hit, Australian retail sales rose by more than expected with spending largely driven by discounts in the face of elevated borrowing costs, an outcome that further strengthens the case for an interest rate hike this year.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

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Retail Sales Scream Recessionary – If You Look Under The Hood!

We got the January 2024 retail data from the ABS today, and they reported that Australian retail turnover rose 1.1 per cent (seasonally adjusted) in January 2024. This follows a fall of 2.1 per cent in December 2023 and a rise of 1.5 per cent in November 2023.

Economists were divided on what to expect, with some looking for 1.5% monthly rebound, while others like Westpac were expected just a 0.3% rise.

The National Retail Association said the latest trade figures reveal the uphill struggle retailers face in 2024 if consumer sentiment remains low and trade continues to slow, despite Australia’s population boom. While data reveals that retail turnover has stalled, population growth and increasing costs of doing business show retail growth has actually fallen in real terms.

The ABS said “The rebound in January follows a sharp fall in December when consumers pulled back on spending after taking advantage of Black Friday sales in November. Retail turnover is now back at a similar level to September 2023.

But as Westpac notes, the pattern reflects difficulties the ABS is having adjusting for shift in seasonal patterns associated with the increasingly popular ‘Black Friday’ sales. Pinpointing these shifts is difficult and typically requires the accumulation of more months of observations. Volatility is progressively smoothed as this happens – notably today’s release again saw a softer profile through November (initially estimated as a 2% surge) and December (initially reported as a 2.7% drop).

However, this volatility has concealed a material slowing over the three months. On a 3mth basis, nominal retail sales growth has slowed to just 0.5%qtr, 1.4%yr, neither keeping pace with price inflation.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog

Retail Sales Scream Recessionary - If You Look Under The Hood!

00:00 / 00:07:21

Retail Sales Scream Recessionary – If You Look Under The Hood!

Economists were divided on what to expect, with some looking for 1.5% monthly rebound, while others like Westpac were expected just a 0.3% rise.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Spend More, To Buy Less!

The ugly truth about inflation is households are having to pay more, to buy less.

We have seen this in a number of data points, the most recent is from the UK, where the Office of National Statistics just released their latest data for October. It revealed that UK retail sales fell unexpectedly, adding to the impression that a string of interest-rate hikes designed to beat down inflation is beginning to stymie economic activity.

This is an early indication that overall economic output will probably be weak in the fourth quarter.

Economists were expecting a rise of 0.4% for October. Instead, sales fell to their lowest since February 2021 when Covid restrictions were in place, with retailers citing the cost-of-living crisis and bad weather for the poor performance. It bodes ill for the “golden quarter,” the run-up to Christmas when stores can make a majority of their yearly profits.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

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