Originally published by AMP Capital
December quarter retail sales fell -0.1% month on month, which was well below market expectations for a 0.3% rise. This saw annual retail sales growth fall to just 3%.
However, the fall in retail sales was driven by an unusual 6.6% fall in hardware and garden supply sales which looks like a bit of an aberration. More significantly soft nominal retail sales growth was driven by very weak price increases with the retail price deflator up just 0.3% quarter on quarter in the December quarter or 1.3% year on year. As a result retail sales volumes rose a solid 0.9% in the December quarter up from flat in the September quarter.
The bounce back in December quarter retail sales volumes suggests that consumer spending has bounced back solidly after September quarter softness and adds to confidence that GDP growth will rebound in the December quarter after the September quarter contraction, thereby avoiding a technical recession.
Meanwhile, ANZ job ads rose a solid 4% in January which is a good sign, but this followed a 2.2% decline in December and job ads tend to be volatile over the Christmas/New Year period.
It’s doubtful that the RBA will change its thinking on the economy in response to the December retail sales data.