Retail sales slump further: Economy roundup
Monday, June 2, 2008/
Retail sales went backwards in April, as signs continue to show that high interest rates and fuel prices are putting the squeeze on consumers.
The value of retail sales fell 0.2% seasonally adjusted, well below market expectations that retailers would hold or slightly improve on a 0.2% rise in March.
Recreational and sporting good retailers and food retailers took the biggest hits, with sales falling 1.2% and 1.1% respectively. The poor result for food retailers, who are wrestling with a global rise in the price of food stuffs, is the single biggest reason for the poor April figure – if food is removed, the 0.2% fall would turn into a 0.5% rise.
At the other end of the spectrum, clothing and soft good retailers increased sales by 2.9% and department stores continued their strong run with 1.9% rise.
But while retailers are suffering, the steady flow of resources wealth into the country is propping up other parts of the economy – and that could mean more rate rises.
According to Australian Bureau of Statistics business indicators released today, company gross profits lifted 2.2%, inventories by 0.9% and wages and salaries 1.5% seasonally adjusted in the March quarter.
Even manufacturing sales volumes increased by 0.7%, with only wholesale sales volumes – reflecting the retail weakness – going backwards with a 0.5% fall.
Looking across the sectors, the gross profits highlight the extent to which the rate rise and petrol pain is being felt by retailers, with retail profits falling 1.8% in the quarter after eight consecutive quarters of growth. By contrast, mining profits increased by 9% and construction by 18.1% seasonally adjusted.
Today’s data reflects that unequal burden different sectors are carrying in the battle against inflation – and that the Reserve Bank of Australia is fighting with one hand tied behind its back.
The result, reflected in today’s Melbourne Institute-TD Securities inflation gauge, is that inflation remains far from under control. It shows headline inflation lifted by 0.3% in May to an annual rate of 4.5%, the fastest rate of increase since the survey began five years ago.
The inflation data has done nothing for the markets today, with S&P/ASX200 slumping upon their release to be down 0.8% on Friday’s close to 5611.6 at 12.15pm, while the Australian dollar is trading at US95.33c.