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🗞️Despite 0.1% Increase in April, Australian Retail Spending Remains Weak

🗞️Despite 0.1% Increase in April, Australian Retail Spending Remains Weak

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The Australian Bureau of Statistics (ABS) released seasonally adjusted data today showing a 0.1% increase in retail turnover in Australia in April 2024. This came after a 0.2% increase in February 2024 and a 0.4% decrease in March 2024."Underlying retail spending continues to be weak with a small rise in turnover in April not enough to make up for a fall in March," stated Ben Dorber, ABS head of retail statistics.

“Since the start of 2024, trend retail turnover has been flat as cautious consumers reduce their discretionary spending.”

Turnover in most non-food related industries rose in April. Other retailing (+1.6 per cent) had the largest rise this month, followed by household goods retailing (+0.7 per cent) and department stores (+0.1 per cent).

Clothing, footwear, and personal accessory retailing (-0.7 per cent) fell.

“The relatively earlier Easter and the different timing of school holidays across the country meant we saw some added volatility in turnover in March and April,” Mr Dorber said.

“Looking across the past two months, we see weak underlying spending in most parts of the retail industry.”

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Food-related spending was mixed with a fall in food retailing (-0.5 per cent), while there was a small rise in cafes, restaurants and takeaway food services (+0.3 per cent).

“The fall in food retailing is a partial reversal of last month’s rise of 0.8 per cent, where the earlier-than-usual Easter boosted spending, particularly on alcohol,” Mr Dorber said.

“Retailers told us spending on alcohol dropped off as consumers brought purchases forward into March and because they are increasingly opting for cheaper alcoholic products.”

Retail turnover growth was mixed across the country. New South Wales (+0.7 per cent) saw the largest rise, followed by South Australia (+0.5 per cent).

Meanwhile,Creditor Watch Chief Economist Anneke Thompson said Westpac consumer confidence data confirms that Australian consumers remain extremely despondent. Although Treasury forecasts that income tax cuts and cost of living measures announced in the budget will assist in a recovery in real disposable income over the 2025 financial year, it remains to be seen if this will flow on to increased spending in the retail sector.

“Even if real disposable incomes do increase with income tax cuts, and weakening labour market and rising unemployment tends to make Australian consumers uneasy about over-spending, it is likely, then, that Australian consumer confidence will remain weak. A recovery isn’t likely until we see two or three cuts to the cash rate, as only then will mortgage holders start to feel more confident that they have some breathing space in their monthly budget,” Thompson said.

She disclosed, “Given we are unlikely to see the second or third cut to the cash rate until the final quarter of 2025 financial year, we expect that insolvencies in the retail sector will increase, especially amongst smaller, discretionary retailers. The retail trade sector has already recorded a 35 per cent increase in insolvency rates over the year to April 2024.”

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🗞️Despite 0.1% Increase in April, Australian Retail Spending Remains Weak

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