Australia: Flat retail sale numbers for Q3 - Westpac

Matthew Hassan, Research Analyst at Westpac, explains that the Australia’s September retail report showed weaker than expected nominal sales but slightly better than expected volumes for Q3 with more of the weakness shown to be due to falling prices.

Key Quotes

“Sales were flat in the Sep month following a 0.5% decline in Aug and a 0.3% fall in Jul. The consensus forecast was for a 0.4% gain.”

“That left nominal sales down 0.3%qtr for Q3 as a whole, the weakest result since 2010.”

“However that was all due to an estimated 0.4% decline in retail prices, the biggest quarterly drop since 2004.”

“Real retail sales, i.e. volumes, were estimates to have risen slightly by 0.1%qtr, slightly better than the market expectation of flat.”

“The storetype breakdown showed decent monthly sales gains for department stores (+2.1%) and food (+0.9%), offset by a hefty fall for ‘other retail’ (–1.7%) and further declines for household goods (–0.4%) and clothing (–0.7%).”

“For Q3 as a whole, solid volume gains for food (+0.9%qtr) and clothing (+0.7%qtr) were offset by sizeable falls for household goods (–1.7%qtr) and department stores (–1.4%).”

“Stepping back, the picture from the report is an unambiguously bad one for retailers – who are cutting prices but finding no traction with volumes.”

“The picture is not quite as bad for consumers who get some advantage from lower prices and do not look to be cutting back on consumption quite as sharply as feared.”

“The wash-up still points to marginal downside risks to the wider consumption estimates in the Q3 national accounts (to be released December 6).”