Retailers cop another hit with weaker spend in February
Weaker retail sales data released by the Australian Bureau of Statistics (ABS) this week is consistent with recent softer economic conditions and a slackening labour market in Queensland.
The Chamber of Commerce and Industry Queensland (CCIQ) believes these results paint a challenging picture for future economic activity in the Sunshine State.
Retail sales are an important leading indicator of the health of the economy and have important insights into the future direction of economic activity.
In general, economists agree that rising retail sales indicates an improving economy and vice versa.
The ABS data shows that Queensland retails sales in the month of February unfortunately underperformed the national average falling 0.4 per cent compared to the Australian average of no change (in seasonally adjusted terms).
On a year-on year comparison, Queensland retail sales grew by a disappointing 1.3 per cent, compared to 3.3 per cent nationally.
Persistent drought across large parts of the state, a weak resources sector and recent job losses particularly in regional areas are hampering consumer confidence and growth in retail sales.
Softer retail sales are a concern for Queensland small businesses at time when the business community is grappling with strong competition from interstate and overseas operators. Rising input costs such as electricity are also squeezing profit levels.
Encouraging trends from Christmas shopping and January sales seem to have disappeared and it is clear the retail sector is not out of the woods yet.
On a positive note, the data revealed a lower Australian dollar has meant more Queenslanders holidaying at home and increasingly purchasing from bricks-and-mortar retail stores, cushioning some retail sales.
The strongest growth in retail was found in department stores, personal accessory retailing, household goods retailing and restaurants and takeaway services.
Looking forward, lower mortgage repayments through record low interest rates and the Reserve Bank of Australia’s willingness to lower rates further in the near term, will boost Queenslanders disposable income and, combined with the wealth effect from a fairly resilient residential property market will help support retail sales in the months ahead.