October retail spending has beaten market expectations, with the 0.3 per cent monthly rise driven by cash dropped on clothing, footwear and personal accessories, as well as a rise for department stores.
But economists remain underwhelmed after disappointing September quarter GDP data on Wednesday, citing an uneven spread of spending and housing-market affected NSW figures as cause for concern.
Seasonally adjusted retail spending for October was $26.99 billion, up from September’s revised 0.1 per cent lift to $26.89 billion, according to Australian Bureau of Statistics data released on Thursday.
The result was slightly better than the expected 0.2 per cent rise, but the Australian dollar dipped and dived on reactions to the data, reaching 72.50 US cents at 1240 AEDT.
“While sales growth is still not strong, it’s looking a touch better than it did mid year, annual growth having lifted from 2.9 per cent in June to 3.5 per cent in October,” Westpac senior economist Matthew Hassan said.
“The detail looks to be a little more uneven with a strong rise for clothing and a solid gain for household goods but mixed results for ‘small ticket’ discetionary storetypes.”
The retail figures follow Wednesday’s flatter-than-expected GDP data, where falling house prices, tighter lending standards and resolutely sluggish wages were credited for a weaker-than-expected 0.3 per cent economic growth in the September quarter.
Sarah Hunter, chief Australia Economist for BIS Oxford Economics, also warned October’s retail rise might not be flowing through to bricks-and-mortar stores.
“Online sales now account for almost six per cent of turnover, up from 4.7 per cent a year ago,” she said.
“Competition from e-retailers is squeezing margins as well as volume of goods sold in stores, we expect this trend to continue into the medium term.”
There was a 2.6 per cent lift in spending on clothing, footwear and accessories to $2.12 billion, while there was a 0.6 per cent rise in household goods spending to $4.6 billion, a 0.2 per cent jump for food retailing to $10.98 billion, and a 0.4 per cent lift for department stores to $1.57 billion.
However, spending in cafes, restaurants and takeaway food services fell 0.9 per cent to $3.81 billion and newspaper and book retailing was down 2.8 per cent to $236 million.
All states except NSW saw a retail lift in October, with the ABS attributing the state’s 0.4 per cent spending drop to poor weather during the month.
Others said the state’s housing market downturn was weighing on people’s wallets.
NSW still accounted for the bulk of the nation’s October retail spend with $8.62 billion, followed by Victoria with $7.09 billion, and Queensland with $5.37 billion.