A day after the unimpressive September quarter national accounts showed Australians had closed their wallets in the quarter, the first reading of consumer activity in the current, 4th quarter of 2019 showed no change.
In fact, the no-change (seasonally adjusted) reading for October retail sales from the Australian Bureau of Statistics (ABS) was a major blow to economists and others who had tipped a rise of 0.3%.
There was nothing of the sort as retail sales growth stalled in October following rises of 0.2% in September and 0.4% in August.
The ABS said the annual rise of 2.1% for October was the weakest since October 2017.
Of more concern, non-food sales – a better guide on discretionary spending – fell 0.1% over the month, seeing the annual increase slow to a 2-year low of 1.4%.
That continues the slide in discretionary spending in the September quarter from earlier in the year.
Economists had tipped a 0.3% lift in part because of a belief that the Federal government’s income tax refunds and tax cuts would lift sales.
For the fourth quarter in a row there was no such boost – that’s a point the ABS also made in commentary in Wednesday’s national accounts for the September quarter.
October was also the month the Reserve Bank delivered its third rate cut of the year, taking the official cash rate down to 0.75% and they have had no impact on retail sales (or car sales for that matter with November seeing a slump of 9.8%).
Worryingly the retail sales slow down came from the country’s biggest states – NSW and Victoria which have also seen governments spending heavily on infrastructure. They are also the states where the rebound in house prices have been most pronounced in their capitals – Melbourne and Sydney.
Retail sales in Victoria dropped by 0.4% while they were off by 0.2% in NSW where they have been weak now for 15 months in a row.
Annual growth in Victoria has now slipped to 1.3% while NSW’s annual growth rate has dropped to 1.5%. Both are well below inflation and the weak rises in GDP in the past year. Turnover fell 0.5% in South Australia as well.
Sales in Queensland were up 0.4% and 0.2% in WA which remains the most depressed state of all.