MNI DATA PREVIEW. Australian Feb Retail Sales Seen Flat

By Lachlan Colquhoun

     SYDNEY (MNI) - The Australian Bureau of Statistics will publish the

February retail trade data on Wednesday. Here are five things to look for:

Stagnating market. 

Retail sales increased by an anaemic 0.1% in January and the market is expecting

another weak result tomorrow, underling the issues in the cooling Australian

economy. The January result came after a 0.4% fall in December. In the year to

January, non food sales grew by just 1.7%, according to the ABS, the slowest

pace since October 2017.

Online sales under pressure. 

The online channel has continued to grow and support the overall result, but the

closely watched Online Retail Sales Index monitored by the National Australia

Bank suggests online sales may also be losing momentum. The index, released

Tuesday, shows sales fell by 3.4% in February, the largest monthly decline on

record. If the ABS figures tell a similar story, tomorrow's data may be in

negative territory. The January ABS figures showed that online sales increased

5.6% in January.

Implications for RBA. 

The Reserve Bank of Australia kept interest rates on hold this week, citing slow

wages growth and consumer spending. A struggling retail sector is a part of this

picture, and continues to be the Bank's justification for keeping rates at the

record low 1.5%. The RBA outlook is that rates could move up or down and if the

retail sector continues to founder this could play into the context for a rate

cut. The RBA is also well aware that the retail sector is Australia's second

largest employer.

Household goods spending. 

Will it rebound? ABS Dwellings Approval data released this week showed that the

number of approved dwellings spiked a surprising 19.1% in February, after a more

modest 3.3% increase in January. This may be a statistical anomaly, but this

industry group needs rescuing from the doldrums. Sales of household items fell

2.9% in December and were unchanged in January.

Regional disparities. 

Retail sales in drought-affected Queensland continue to struggle, with the lack

of rainfall cited by the RBA Board this week as one factor putting brakes on the

national economy. Retail sales in Queensland fell 0.2% in December and 0.5% in

January. In NSW, by contrast, sales rebounded 0.7% in January to be the best

performed among the States.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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