Last week’s figures from the Australian Bureau of Statistics (ABS) showed retail sales for July were flat, the weakest result since March.
That lagged expectations of 0.3 percent growth and followed a 0.4 percent rise in June.
Losses
Clothing and footwear down 2 percent
Department store sales down 1.9 percent
Household goods down 1.2 percent
Gains
Food retailing up 0.4 percent
Clothing, footwear and personal accessory retailing up 0.5 percent
Cafes, restaurants and takeaway food services up 0.3 percent
Food, cafes and restaurants is a category that has remained resilient over the past year or so.
The following states and territories rose in trend terms in July 2018: New South Wales (0.4%), Victoria (0.4%), Queensland (0.1%), Tasmania (0.6%), South Australia (0.2%), the Australian Capital Territory (0.5%), and the Northern Territory (0.2%). Western Australia was relatively unchanged (0.0%).
The downbeat data briefly weighed on the Australian dollar which slipped to 71.66 US cents, the lowest since early 2017.
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 earlier in the day showed Australian job advertisements eased in August and were no longer pointing to a further decline in the unemployment rate.
Separate figures showed home prices fell for the 11th straight month in August as banks tighten lending standards amid damaging revelations of some of their business practices.
Lending growth is at its weakest in more than four years while measures of consumer confidence have remained subdued for more than a year now.
Compare that with 7.8% in South Korea
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 for some considerable time to come.
“Ongoing home price falls in Sydney and Melbourne will depress consumer spending as the wealth effect is now going in reverse,” said 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 rose two per cent in the June quarter, the third straight quarter of solid gains that left profits up more than 11 per cent on a year earlier.
There was also some better 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 rose 4.5 per cent annually, more than double individual pay growth as employers take on more workers.
