Fires, Black Friday sap December retail
Bushfire haze and Australia's embrace of the November Black Friday sales have taken a worse-than-expected toll on December retail trade, with cafes and restaurants particularly affected in a 0.5 per cent monthly spending drop.
Seasonally adjusted retail spending fell by $140 million during the month to $27.77 billion, according to Australian Bureau of Statistics data released on Thursday, the momentum reversing sharply from a sales-driven 0.9 per cent rise in November.
NSW businesses were especially hit by the bushfire catastrophe, with sales dropping by 1.2 per cent.
Only South Australia was worse, with a 1.3 per cent fall, while Tasmania's 1.1 per cent rise was the only monthly improvement in the nation.
Ernst & Young chief economist Jo Masters said the data highlighted "ongoing and considerable pressure in the retail sector", from weak demand and ongoing price competition.
"Consumers are clearly taking advantage of sales events, such as Black Friday in November and this is underpinning pricing pressures," Ms Masters said.
"The drought and the bushfires crisis look to be impacting the retail space, and will likely continue to do so in coming months."
However, Westpac senior economist Matthew Hassan said a better than expected wash-up for volumes over the December quarter as a whole made Thursday's report a mixed bag.
Quarterly retail volumes exceeded economists' predictions of a 0.3 per cent rise, lifting by a seasonally adjusted 0.5 per cent in the three months from October.
Callam Pickering, APAC economist at Indeed, said this again reflected solid sales over Black Friday.
"Nevertheless, retailers have suffered through a difficult 2019 and there was a genuine difficulty in pushing product out the door," Mr Pickering said.
"Due to these retail figures, we'd expect household consumption to contribute more to economic growth in the December quarter than we've seen throughout 2019.
"That's good news since household spending accounts for more than half of Australia's economy."
The Australian dollar edged up to 67.57 US cents from 67.52 US cents immediately after the release of the data, and was worth 67.56 US cents at 1237 AEDT.
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