Christmas miracle needed as signs point to recession


RETAILERS are hoping strong spending in the lead-up to Christmas will boost the coffers as the latest trade figures revealed the sector remains in a slump.

Australian retail turnover rose 0.2 per cent in September, seasonally adjusted, according to the latest Australian Bureau of Statistics retail trade figures.

It is softer than expected, with the retail sector hoping the government's $1080 tax rebate for low and middle income earners, released in July, would stimulate the sector.

Rises were recorded in other retailing (0.8 per cent), cafes and restaurants (0.6 per cent), and food retailing (0.1 per cent).

The rises were slightly offset by a fall in clothing, footwear and personal accessory retailing (-0.5 per cent) and department stores (-0.2 per cent).

Household goods (0.0 per cent) was relatively unchanged.

Queensland, at -0.1 per cent, fell in seasonally adjusted terms in September 2019.

Online retail turnover contributed 6.3 per cent to total retail turnover in original terms in September, up from 5.6 per cent at the same time in 2018.


National Retail Association boss Dominique Lamb. Pic: Peter Wallis
National Retail Association boss Dominique Lamb. Pic: Peter Wallis


National Retail Association CEO Dominique Lamb said while the figures were not "disastrous", they were expected to be higher for the month.

"Measures such as tax cuts and reductions to interest rates have already been implemented, but clearly we're still yet to see retail sales rebound like we would have hoped," she said.

"Options that should be explored to stimulate sales include fast-tracking tax cuts due to come into effect in the coming years, government spending and even a further cut by the RBA to the cash rate."

In annual terms, retail trade volumes fell by 0.2 per cent, the first negative movement since 1991, during Australia's last recession.

Ernst & Young chief economist Jo Masters said the "disappointing" September sales showed consumers remained cautious despite the government's tax offset and record-low interest rates.

"Australian households are yet to respond to the turnaround in housing combined with the stimulus from rate cuts and the low and middle-income tax offset," she said.

"Indeed, it appears that households are spending less of the stimulus than we would typically expect.

"The RBA's forecast assumes about half is spent, but this looks optimistic."


Jo Masters is chief economist at EY Oceania.
Jo Masters is chief economist at EY Oceania.

Ms Masters said while increased spending may still emerge, Christmas spending "now becomes critical".

While many Australians have lodged tax returns earlier than usual, the average rebate has risen by around $420, as increased scrutiny around deductions works to offset the rebate.

Ms Masters said quarter three's GDP would start from a weak base, with retail trade making up about 30 per cent of consumption.