Retail spending flat

Australian retail sales fizzled out in July although nationwide home prices fell again in August and a measure of job advertisement eased, suggesting a further dent in consumer assurance and spending.

Monday’s personalities from the Australian Bureau of Statistics (ABS) showed retail sales for July were flat, the weakest result after March.

That lagged expectations of 0.3 per cent growth and followed a 0.4 per cent rise in June.

Clothing and footwear led declines with a two per cent fall although sales at department stores eased 1.9 per cent and household goods retailing faltered 1.2 per cent. The drops were offset by gains in food, cafes and restaurants – a category that has remained resilient over the past year or so.

The downbeat data briefly weighed on the Australian dollar that slipped to 71.66 US cents, the lowest after fresh 2017.

The currency was last at 71.92 US cents at 1348 AEST.

The disappointing sales come as economists worry about the impact on household consumption from snail-paced wage growth and a slowdown in Australia’s once-booming housing market.

Worryingly, data out prior in the day showed Australian job advertisements eased in August and were no longer pointing to a further decline in the unemployment rate.

Separate personalities showed home prices fell for the 11th consecutive month in August as banks tighten lending standards amid damaging revelations of a few of their company practices.

Lending growth is at its weakest in more than four years although measures of consumer assurance have remained subdued for more than a year now.

All of this means the Reserve Bank of Australia (RBA) will stay on its steady policy path as it awaits a pick-up in inflation and economic growth.

The central bank is all but certain to keep rates at a record low 1.5 per cent at its monthly policy meeting on Tuesday.

“Ongoing home price falls in Sydney and Melbourne will depress consumer spending as the wealth effect is now going in reverse,” stated AMP Chief Economist Shane Oliver.

“It’s consistent with our view that the RBA will leave rates on hold out to late 2020 at least.”

Separate data from the ABS on company earnings showed gross operating profits grew two per cent in the June quarter, the third consecutive quarter of sturdy gains that left profits up more than 11 per cent on a year earlier.

There was further a few ahead news on household incomes.

Firms paid out $137 billion in wages and salaries in the June quarter, up 1.2 per cent on the previous quarter.

The wage bill grew 4.5 per cent annually, more than double individual pay growth as employers take on more workers.

Australia’s GDP data is due Wednesday and a Reuters ballots of 16 economists show the $1.8 trillion economy likely expanded at 0.7 per cent last quarter, slower than the brisk pace of 1.0 per cent in the three-month ended March.

With AAP.

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