Australia: Retail sales rebound – Westpac

Matthew Hassan, Research Analyst at Westpac, notes that Australia’s June retail sales report was stronger than expected as monthly sales posted a third consecutive 0.4% gain, above expectations of a slightly softer 0.3% for June.

Key Quotes

“The big surprise was around real retail sales for the quarter, which posted a 1.2% increase vs consensus expectations of a 0.8% gain.”

“Recall that retailers had a difficult March quarter with sales rising just 0.2% and the wider consumer spending measures in the national accounts showing a similarly disappointing outcome.”

“The June quarter rebound in retail volumes suggests much of this is quarterly ‘choppiness’ rather than a move to a weaker underlying trend. Sales momentum is still sub-par but the trajectory is a little less concerning.”

“Annual growth in real sales remains subdued at 2.5%yr.”

“Overall, the retail report removes some downside risks around the Q2 GDP update due out on September 5. Although vehicle sales look to be down about 2%qtr, the solid gain in retail should anchor the gain in total spending around a 0.6-0.7%qtr mark depending on how service sector activity has tracked.”