Australia | Oct 31 2006
By Chris Shaw
National Australia Bank’s Retail Report for September shows Australian retail conditions improved modestly for the month, the increase representing a reversal from the weak results seen in both June and July.
On the bank’s estimates ‘real’ retail sales rose 0.6% in the September quarter in volume terms, equating to an increase over the past year of 2.75%. The lack of any real change reflects offsetting conditions, the bank noting the boost from tax cuts, job gains and a strong share market has been largely offset by the headwinds of higher interest rates and petrol prices and modest house price gains.
Factoring all this in, the bank has revised down its estimate for household consumption for 2006/07 to 2.5% from 3.0% previously, which is below the average for the last five years of 4.0% and the long-term average of 3.5%.
In many ways the latest report shows little has changed, as the bank notes competition in the retail sector remains high and there is still a blurring of traditional sales channels. Sales, profits and employment all showed gains from recent months, though there remains evidence of inconsistent performance across industries as retail conditions remain strong at the same time as car retailing is quite weak.
The mixed performance across different regions also continues, as the faster-growing Northern Territory, Western Australia and Queensland all recorded above average retail trade growth for the quarter while New South Wales, Victoria and South Australia were all below the national average of a 5.6% increase.
The bank notes business conditions generally have improved slightly in recent months, though there has not been a return to the peak levels seen in April, which is before interest rates started moving higher. Conditions generally also remain slightly below their historical averages.