Rate cuts fail to stoke retail sales
LOWER interest rates have failed to boost the struggling retail sector, as November sales posted a surprise drop on the back of lower consumer spending on non-food items.
Retail sales fell 0.1 per cent in November to a seasonally adjusted $21.5 billion, the Bureau of Statistics said in a report released on Wednesday, disappointing economists who had expected a 0.3 per cent rise.
"If the consumer is cheered by the interest rate cuts, she's still keeping it to herself," BT Financial Group chief economist Chris Caton said, adding that there was "no good news" in the data.
The dollar slipped more than a quarter of a cent to US104.91¢, as financial markets' expectations of a Reserve Bank rate cut in February rose marginally from 36 to 38 per cent, Credit Suisse data showed.
AMP Capital senior economist Bob Cunneen said the November result was "disappointingly soft" and the Reserve Bank's interest rate cut in October had not had a positive impact on consumers' willingness to spend.
The release followed the Housing Industry Association's report on new home sales, which rose 4.7 per cent in November and were led by a 7.7 per cent growth in the sale of detached houses.
Spending on household goods fell 0.9 per cent. Consumers shelled out less for clothing, footwear and personal accessories, and reduced their purchases in department stores.
Consumers were more willing to eat at cafes, restaurants and order takeaways, with the sector growing 0.3 per cent. Spending in other retail sub-sectors such as recreational goods, pharmaceuticals, cosmetics, toiletries, newspaper and books also rose slightly.
New South Wales, South Australia, Western Australia and the Northern Territory all recorded falls for November, while the Australian Capital Territory registered the strongest rise in spending at 1 per cent.
Mr Cunneen said that although the results confirmed to retailers they were operating in a difficult environment, they should not be "automatically pessimistic" about their 2013 outlook. "With the December interest rate cut starting to flow through, [retailers] should be a bit more positive that it should be a better year," he said.
Numerous job-loss announcements in the private and public sectors last year weighed on consumers' willingness to spend, but a stabilising labour market would reduce their insecurities and cautiousness, Mr Cunneen added.
The Australian National Retailers Association, which is pushing for a lower GST online threshold, said the soft figures reflected consumers' shift to shopping at international online sites ahead of Christmas.