Australia: November retail sales jumped 1.2% - Westpac

Simon Murray, Research Analyst at Westpac, notes that November Australian retail sales jumped 1.2%, led by the household goods and 'other retailing' category and were well in excess of consensus expectations for a 0.4% rise.

Key Quotes

“There were some key retail events in the month such as the Black Friday sales and the release of the Iphone X. That saw the household goods category surge 4.5% and the ‘other retailing’ category lift 2.2%. Together these categories make up roughly a third of total retail sales but they accounted for 90% of November’s increase. Within household goods, electronic goods rose an outsized 9.3%. Excluding the household goods and ‘other retailing’ categories, sales grew 0.2% with positives in clothing and footwear +1.6%, and cafes and restaurants +0.4%, while food retailing was flat and department stores fell 1.1%.”

“By state, strength was relatively broad with Victoria up 1.8%, NSW rising 1.0% and SA increasing 1.5%. For the mining states, WA rose 1.4% and Qld 0.7%. Tasmania has had a strong run of late, up 1.8% in November while the NT eked out a 0.2% gain.”

“Overall, the result reflects a strong consumer response to emerging sales events, namely the Black Friday sales, with a boost in spending across household goods, in particular electronics, as well as the ‘other retailing’ category. These relatively new events in Australia may be having a behavioural effect on the way consumers shop, postponing purchases in the lead up to expected discount intervals, and are yet to be fully reflected in seasonal adjustments to the data. That could result in increased volatility in retail sales data with Q4 bouncing back from a very soft Q3.”

“Nevertheless, fundamentals for the consumer are still subdued with weak household income growth a constraint on spending. But with the arrival of Amazon a key factor in the upcoming December release, there will likely continue to be somewhat higher volatility in sales data in the near term.”