Retail sector still suffering chilly winds

The past 12 months have been some of the toughest for the retail sector, with sales struggling in spite of interest rate cuts and steady employment numbers. The national construction sector has also been hurting.

Year on year, it has been the same story with household savings rising, the higher dollar making overseas travel more attractive and the erosion in apparel sales from the internet.

The latest Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (PCI) released on Friday showed the national construction industry continued to contract in June - albeit at a slower pace.

The Australian PCI has now been contracting for 34 consecutive months. The survey found that the new orders sub-index remained unchanged at 34.8, although new orders declined at a slower pace in the house building, apartments and commercial construction sectors. Meanwhile retail sales at shopping centres and suburban strips have also suffered. Retail experts say it's been a combination of the warm lead-up to winter, the heaving and constant discounting across all sectors and, to a lesser extent, the uncertainty emanating out of Canberra with the pending federal election.

The two largest states, NSW and Victoria, both recorded a fall in retail trade over May. Sales were down by 0.4 per cent in NSW and 0.3 per cent in Victoria.

The saviour has been food and what economists label food catering, or takeaway meals and cheap and cheerful restaurants. Retail trade rose by 0.1 per cent in May after falling by 0.1 per cent in April and falling by 0.6 per cent in March. Annual spending growth fell to 2.3 per cent - the weakest annual growth rate in 15 months.

In the latest Australian Bureau of Statistics, it shows that non-food retailing rose by 0.1 per cent in May after rising by 0.2 per cent in April. Sales by chain-store retailers and other large retailers rose 0.3 per cent in May.