Retail sales numbers for the month of November have been better than expected, offering some hope to Australia’s struggling retail sector.
Sales rose by 0.4 per cent to $27.1 billion during the month, beating the predicted 0.3 per cent figure, according to the Australian Bureau of Statistics (ABS).
With concerns over household consumption growing amid falling house prices, the news has been hailed as a positive for the overall health of the economy.
However, economists have warned that Friday’s bumper sales numbers could have been falsely inflated by new shopping trends.
They say the above average results may be more to do with the rise of popular online shopping sales in November such as Black Friday and China’s Singles’ Day, changing when we purchase Christmas gifts.
“We’ve seen online frenzy sales in November become a thing in the last year or two and we’ve got a view that this has bought some sales forward from December into November,” Jeremy Thorpe, chief economist at accounting giant PwC, told Trading Day shortly after the data was released.
“That this result is better than expected fits our narrative that the online market is really changing and bringing forward sales.”
“I expect December to be worse as a result.”
Considering the major changes undergoing retail in the last two years, chief economist at BetaShares, David Bassanese said the latest figures still mark consumer spending as “the single biggest risk” for Australia’s economy in 2019.
“Sixty per cent of the economy is consumer spending and with housing turning down that is the soft underbelly for the economy this year,” said Bassanese.
“If people have been buying their Christmas presents online in November rather than in the store in December, that’s quite a change.”
Retail sales data offers a glimpse into how much households are able to spend and is considered one the most important economic indicators into the health of an economy.
Poor results are widely seen as a potential indicator of recession.
Perhaps one of the most unusual tidings of economic woe in the retail sector this week was Thursday’s profit warning by one of Australia’s largest avocado producers.
Costa Group’s chief executive Harry Debney blamed low sales of avocados, berries and tomatoes for the company’s poor profit growth, leaving investors of the company running for the door.
With smashed avocado toast the quintessential brunch food of the millennial generation, the news has been pegged as a potential sign of a slowdown in spending habits.
“Smashed avocado… I do wonder whether that’s starting to be a signal of consumer spending… maybe there’s something in that,” Thorpe said.
Aust Nov retail sales +0.4%mom, stronger than expected but annual growth slowed to 2.7%yoy. Expect retail sales to be soft over the year ahead as jobs growth slows, wages grth remains weak & falling house prices weigh. Falling avocado sales might be telling us something! #ausecon pic.twitter.com/Be08MNG1Su
— Shane Oliver (@ShaneOliverAMP) January 11, 2019
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