Australia Retail Sales Growth at 4-Month High
The ABS initial estimates of official retail showed a much stronger than expected 1.3% gain in July. That compares to a low rise of 0.2% in June and marks the strongest monthly gain since March. The consensus forecast was of a 0.3% rise The detail shows a broad-based lift with nothing to suggest the monthly gain is a rogue. Rising retail prices undoubtedly account for a sizeable part of the rise, with volumes likely to have been somewhat flatter.
Recall that the ABS retail release now comes in two stages, an early preliminary release with limited detail and a final estimate that may see some revisions and provides the full range of additional detail.
The limited detail available for July shows a strong rebound for department stores and a strong gain for clothing and footwear, with robust rises for cafes and restaurants and basic food. The only soft spot was around household goods which saw a second consecutive monthly decline, down 1.1%mth. That weakness may be a sign that housing-related and big ticket durables spend in contracting but the rest of the detail suggests this is being more than offset by strong gains in both small ticket discretionary categories and essentials.
Overall, the July update suggests initial rate rises have done little to slow the consumer. We still expect the RBA’s tightening and slumping consumer sentiment to eventually weight on demand but that may not come until late in Q3.