Matthew Hassan, Research Analyst at Westpac, points out that Australian retailers reported a slightly better than expected, though still modest, 0.4% lift in sales in May.
Key Quotes
“Markets had been expecting a 0.3% rise. April’s 0.4% gain was also nudged up to 0.5%. Annual growth remained subdued at 2.5%.”
“A rebound in clothing and department stores drove the gain with weak conditions across other categories.”
“This rebound may be weather-related – clothing retailers reported some improvement in recent months after abnormally warm weather in the early part of winter weighed on sales through March-April. Retail ex clothing and department stores was flat in the month.”
“Overall, the May survey detail is not as positive as the headline figure suggests. A lacklustre consumer, competitive pressures and price discounting still look to be clear headwinds for the retail sector.”
“Looking forward, price discounting may ease a touch with the introduction of GST on low value imported goods from July 1, which will affect the pricing and availability of offshore based online retail competitors. However, the housing slowdown is likely to have some dampening impact on spending as well.”
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