SYDNEY • Australian retailers suffered their worst decline in sales since early 2013 as debt-laden consumers tightened their purse strings, slashing spending on food, furniture and clothing, an outcome that bodes poorly for third-quarter economic growth.
Yesterday's data from the Australian Bureau of Statistics (ABS) showed retail sales dropped 0.6 per cent in August, confounding expectations for a 0.3 per cent increase.
July was also revised down to show a 0.2 per cent fall.
The 0.8 per cent slump in July and August is the biggest back-to-back fall since October 2010.
Australia's retail sector had shown some signs of life earlier in the year, but that recovery was short-lived as sluggish wages and household incomes sapped spending power.
The data casts a shadow on the Reserve Bank of Australia's (RBA) forecasts for the A$1.7 trillion (S$1.81 trillion) economy to accelerate at 3 per cent over the next two years.
The RBA has long feared ballooning debt in Australia's red-hot property sector was limiting consumers' ability to spend elsewhere in the economy, one reason it has held rates at an all-time low of 1.5 per cent since August last year.
"On the face of it, this is not good news for third-quarter GDP growth," said Commonwealth Bank senior economist Michael Workman. "We aren't hearing anything like this sort of weakness from our clients, and people are still spending on cars and services. It's just very odd."
The ABS figures showed falls across every single state, a rare occurrence, with food, eating out and household goods leading the losses. Department stores did gain 0.7 per cent, but that followed a sharp drop of 2.6 per cent in July.
But not all is doom and gloom.
The ABS' experimental estimates of online retail turnover jumped 6.3 per cent in August from the previous month and were rapidly catching up to last year's Christmas sales.
The online numbers are not yet part of the headline retail series and are not seasonally adjusted.
Analysts at National Australia Bank estimate annual growth in online turnover actually accelerated last month to around 10 per cent, from 8.5 per cent in July, and was worth more like A$23 billion over the 12 months to August.
REUTERS
