Australia’s retail sales lift more-than-expected in May

Australian retail sales increased 0.6 per cent, on seasonally adjusted basis, surpassing expert expectations of just a 0.2 per cent gain, according to data released this week.

While the May results were down on the 1 per cent growth recorded in April, economists were pleased with the May increase, saying it signaled a solid second quarter for Australia after a poor start to year. Year-on-year, sales increased 3.2 per cent.

With the majority of categories strengthening, department stores continued to have problems with turnover falling 0.7 per cent.

Clothing, footwear and personal accessories rebounded from a recent weakness, largely held up by the demand for personal accessories and shoes, as apparel sales fell.

Supermarket sales rose 0.5 per cent, while liquor sales dwindled, down 2.1 per cent.

Finally, there were strong gains in electronic goods, furnishings and garden supplies.

By state, shoppers in New South Wales and Victoria were the biggest spenders, while retail sales in Queensland fell for the sixth time out the last seven months.

Analysts said the much stronger-than-expected rise in retail sales in May, coupled with the leap in sales over April, suggests Australia’s consumption growth surged in the second quarter. However, it may not be sustained.

“With consumer confidence continuing to trend downwards, households’ incomes facing an additional squeeze from rising energy bills and household indebtedness at a record high we expect that real consumption growth will slow from around 2.6 per cent year-on-year in the second quarter to 2.0 per cent by the end of the year,” Capital Economics analyst, Kate Hickie, told The Australian.