Retail Spending Stagnating, Strong November Likely

October retail sales were weaker than expected falling 0.2% m/m after +0.9%. The ABS noted that consumers held back on spending during the month as they were waiting for late November’s Black Friday sales. With the growth in this event, there has been a shift in the timing of festive spending which is impacting the data despite its seasonally adjustment. The message from this data is consistent with the view that consumer retail demand has softened but it isn’t contracting yet.

• Retail spending is now only 1.2% higher than a year ago, the slowest annual growth rate since the Covid-impacted August 2021. Levels are only 1.5% higher compared to Q4 last year, suggesting that spending has stagnated over the year but hasn’t shrunk.
• Sales were weak in all major categories except food. Clothing & footwear fell 1% m/m, department stores -0.6% and household goods -0.6%.
• Restaurants, which had been quite resilient, saw sales decline 0.4% - the second consecutive drop. The ABS notes that people are dining out less due to higher food prices and cost-of-living pressures. Sales are still 4.6% higher than a year ago but well off the 2022 peak as pent-up demand for going out following the pandemic has been worked through.

Source: MNI - Market News/ABS