09/01/2013 - 09:34

WA retail sales dip

09/01/2013 - 09:34


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A surprise fall in retail sales in November due to a drop in spending on discretionary items does not necessarily mean an interest rate cut in February, economists say.

Australian retail spending fell 0.1 per cent to $21.533 billion in November, the Australian Bureau of Statistics said on Wednesday, compared with a downwardly revised $21.547 billion the previous month.

The result, which was below market forecasts of a 0.3 per cent rise, sent the Australian dollar back below 105 US cents.

At 1147 AEDT, the Australian dollar was at 104.93 US cents, down from 105.17 US shortly before the data was released at 1130 AEDT.

In Western Australia, retail spending dipped 0.3 per cent in November from $2.676 billion from the previous month to $2.66 billion, seasonally adjusted. Sales are up by 8.6 per cent from a year ago.

ANZ senior economist Justin Fabo said the data would not have huge implications for the Reserve Bank of Australia's (RBA) February board meeting.

"It is pretty old data and the Reserve Bank was cutting rates after this actually happened," Mr Fabo said on Wednesday.

"We've got to remember retail sales is only a third of total consumption so while it is weak, the Bank has actually been saying it expected consumption growth to be pretty modest in the near term."

The RBA board cut the cash rate by 25 basis points to three per cent at its December board meeting.

The central bank traditionally does not meet in January.

The discretionary sectors were all down in November - spending on household goods dropped 0.9 per cent, while the clothing, footwear and personal accessory category backpedalled 0.6 per cent.

Moreover, sales at department stores were down 0.4 per cent.

The only retail sectors that did not go backwards in November were food retailing, which was flat, spending at cafes, restaurants and on takeaways, which rose 0.3 per cent and the "other" retail category which was up one per cent.

Commonwealth Bank chief economist Michael Blythe said Australians were still spending money, but most traditional retailers weren't feeling the benefits.

"It's the weaker side of the consumer story we are seeing here," he said.

"We know they are quite happy to get out there and buy new cars at record rates at the moment, and of course we have record numbers heading overseas and no doubt doing a bit of their retail spending there."

Mr Blythe said the figures revealed a weak start to the Christmas sales period.

"Clearly there wasn't a big rush to the stores for that pre-Christmas trading period."

He said the figures added to the case for the RBA to cut the cash rate again in the coming months.


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