Australia: Retail sales bounce 1% in April – Westpac

Matthew Hassan, Research Analyst at Westpac, explains that Australian April retail sales bounced 1% as Qld recovers from Cyclone disruptions; Underlying conditions looking firmer but some of the April rise likely reflects temporary weather-related food price increases.

Key Quotes

“Retail sales came in better than expected for April with a stronger post-Cyclone rebound in Qld and some solid gains across other states.”

“Total retail sales rose 1% vs expectations of a 0.3% gain – the strongest monthly result since Sep 2014.”

“Note that some of the rebound reflects higher prices with fresh fruit and vegetable prices in particular rising due to Cyclone disruptions to supply.”

“The sub-group detail showed a strong 1.2% rise for basic food coming off a 0.5% contraction in March.”

“There were strong gains in other sub-groups as well though – non food retail as a whole up 0.8%mth.”

“Department stores led the way with a 2.5% rise, the best 3mth performance since 2015 although the timing of sales can throw around seasonally adjusted sales estimates month to month.”

“The state breakdown highlights weather impacts: Qld saw a 2.4% jump, more than compensating for last month’s 1.3% fall. Results were more mixed across other states ranging from a surprisingly strong 1.2% rise in WA and a robust 1% gain in Vic to a 0.4% rise in SA and insipid 0.1% increase in NSW.”

“Overall the result is considerably better than feared, confirming temporary impacts from weather events were a factor in March and suggesting underlying conditions have improved somewhat. The main caveat is around food prices which may account for the bulk of the gain in this large sub-component (basic food accounts for 40% of total retail sales).”