Australia received a mixed early report card on the economy for May yesterday with weak retail sales, but a higher than expected rise in the trade surplus. As well, new home sales hit an 18 month high in May, suggesting that the long forecast surge in this sector was at last taking root.
Retail sales rose 0.1% during May (seasonally adjusted), rebounding from April’s 0.1% drop which was cut from the original estimate of a 0.2% rise (meaning April was a miserable month formany retailers, as it seems). Sales rose 0.2% on a trend basis.
The result was below market forecasts for a 0.3% increase.The weaker data for April and the lower than forecast rise for May means the sector is slowing from the strong rise in the March quarter.
This supports the widespread pessimistic and downgrades from parts of retailing in the last two months.
But there’s a way at looking at retail sales that suggest they are not as bad as they look.
If you look at the monthly internet retail sales index from the National Australia Bank, it suggests that totals retail sales (bricks and mortar and online), is running at a higher rate than in the Australian Bureau of Statistics figures suggest.
Australians spent a seasonally adjusted $21.8 billion in May. Western Australia had the biggest growth – 1.6% Queensland reported a 0.5% increase, South Australia and Tasmania saw a lift of 0.6% and the Northern Territory saw sales rise by 0.8%. NSW saw a 0.4% fall on a seasonally adjusted basis (but was up by 0.4% on a trend basis).
But the May online retail sales index for May from the National Australia Bank, released earlier this week, shows a different story (as was to be expected).
According to the NAB, Australians spent $13.7 billion in the year to May, with online sales growing 18% for the year compared to the previous corresponding period.
That was down 24% in the year to April. The NAB said online sales rose by 3.2% year-on-year for bricks and mortar retailers, up from 2.4% the previous year.
There is some overlap between the two ABS and NAB surveys, but even after accounting for that, retailing is doing better than the official figures suggest.
And, remember, if we measure retail sales the same as Americans do by incoming car sales, then the improvement in retailing in May was much stronger and broader based – but still slower in the March quarter on best estimates.
May’s trade surplus came in above expectations, widening to $670 million, up from April’s $171 million and far more than the hopelessly out of touch market estimate of a rise of just $53 million.
The growth in the trade surplus came as exports rose 4% from a year earlier, while imports were 2% higher.
Coal and iron ore export volumes improved while the dollar’s fall, which started in May, helped offset weaker prices.
It was the fourth consecutive monthly surplus and follows the $171 million surplus recorded in April (revised up from $28 million) and the $508 million surplus recorded in March (revised down from $555 million). In seasonally adjusted terms, exports rose $914m (or 4%) to $26.444 billion. Imports were up 2%, or $414 million to $25.774 billion, mostly on the back of higher consumption goods (up $357 million).
Australia’s two major export commodities – iron ore and coal – rose by $198 million and $264 million respectively in May.
Exports to China rose by $718 million over the month to a record $8,1 billion. Exports to the the next three biggest markets – Japan, Korea, and India – also rose by $517 million, $177 million, and $141 million respectively over the month.
And there was a 1.6% improvement in new home sales in May.
The HIA New Home Sales report shows that sales of detached house sales tops 0.9% – up 4.3% in NSW, 8.8% in Victoria and 6.9% in South Australia.
Detached house sales fell by 2.2% in Queensland and by 10.3% in Western Australia as the mining boom continued cooling, but nationally, multi-unit sales grew at 5.7% in the month.
