Retail back in its former rut
RETAILERS hoping consumers would return to the shops after big government handouts have had their hopes dashed.
RETAILERS hoping consumers would return to the shops after big government handouts have had their hopes dashed.The $2.85 billion in early carbon tax compensation and schoolchildren bonus payments boosted retail spending by 0.6 and 1.2 per cent in May and June, but when the sugar hit stopped in July the month the government turned off its spending tap in order to return to surplus spending slumped 0.8 per cent.Department store spending, which climbed 1.2 and 3.7 per cent in May and June, dived 10.2 per cent in July its biggest slide in seven years.The Bureau of Statistics figures suggest consumers brought forward planned department store purchases in May and June rather than deciding to re-embrace the sector. Over the past year department store sales are down 5.3 per cent.David Jones' sales have been falling for seven consecutive quarters. Myer's sales have been shrinking for four years."Retailers had cautiously welcomed the significant improvements in trading figures in the past couple of months," said Australian National Retailers Association chief executive Margy Osmond. "Sadly, their caution proved correct. With government stimulus from the federal budget, as well as carbon price compensation, families felt secure enough to shop but now the bottom has dropped out of that and it's back to the savings bunker."Every state and territory went backwards in August, including the mining states of Western Australia and Queensland for the first time this year. The Australian dollar slid half a US cent on the news to a five-week low of US102.40? before recovering to close at US102.58?, down half a cent from Friday's close.Separately released Bureau of Statistics figures show company profits slid for the third consecutive quarter in June, dipping another 0.7 per cent, to be down 6.5 per cent over the year.Mining profits were down 18.3 per cent over the year, while non-mining profits were flat. Over the quarter profits fell in 10 of the 15 industry groups. Manufacturing profits slid 8 per cent and retail profits 3.8 per cent.Inventories grew 0.6 per cent, driven by increases in only two sectors, mining and wholesale trade, suggesting a build-up of stocks as demand slowed.Wage and salaries grew just 0.8 per cent in the quarter, the weakest growth since the financial crisis. ANZ job advertisement figures released yesterday show a further slide of 2.3 per cent in August the fifth consecutive monthly fall. Job advertisements are down 9.6 per cent over the year.Job advertisements have been weakening for six months in the mining-heavy states of Western Australia, Northern Territory and Queensland."Underneath all this are the falls in commodity prices which started back in late 2011," said Deutsche Bank economist Adam Boyton. "With the latest slump in iron ore prices likely to see a pronounced fall in the terms of trade come the end of the year and hence a more pronounced slowing in economy-wide incomes growth the case for further monetary easing in interest rates remains strong."The Reserve Bank is expected to leave rates on hold at its board meeting today but may acknowledge concern about the weakness in iron ore prices in the statement released after the meeting, opening the door to an eventual cut in rates.The TD Securities inflation gauge climbed 0.6 per cent in August. Excluding volatiles, it climbed 0.2 per cent. The RP Data house price index was flat.