Australia: Stronger retail sales data – Westpac

Matthew Hassan, analyst at Westpac, points out that Australian retail sales came in much stronger than expected in Nov on what looks to be a combination of 'Black Friday' sales and some delayed effect from policy stimulus measures.

Key Quotes

“Total retail sales rose 0.9%mth, well above expectations of a 0.4% gain and the strongest monthly result since November 2017. Annual growth lifted to 3.2%yr.”

“Much of this reflects the growing popularity of the 'Black Friday' sales event although the detail suggests traditional retail also recorded a strong gain that would be consistent with some delayed effect from recent stimulus measures - the tax offset payments that went out in the third quarter and interest rate cuts in June, July and October. The combined value of this should be adding around $16.6bn to household disposable incomes over the year to June 2020 but so far had seen essentially no flow through to spending. Note that, in dollar terms, the relatively strong Nov gain in retail sales is still only worth $250mn.”

“While we welcome the improvement and see evidence of a wider lift we are wary that much of the Nov gain may prove to be a temporary effect due to the rising popularity of 'Black Friday' sales that has sees a corresponding drag in months to come. Notably, the lift also comes despite business and consumer surveys pointing to continued subdued conditions. The data also predates the summer bushfires which are likely to impact both spending and consumers sentiment.”