Australia’s national accounts showed soft real GDP growth of 0.8% for the September 2024 quarter. While household income growth was strong, consumer spending was softer. Year-on-year nominal consumer spending rose 4.1%, or 0.4% in real terms, which is below long-term trends. Households lifted their savings in the September quarter with more than half the tax cuts saved. While spending was soft, the strength of income growth and stored up savings make us positive that retail sales growth will continue improving from here.
Australian retail sales rose 3.8% year-on-year in October 2024. It was a strong month for non-food retail up 5.1%, which is above long-term trends. It is uncommon for non-food to outperform, but the combination of good household income growth and a softer September has brought out shoppers. Pharmacy, cosmetics, recreational goods and online were the strongest growing categories. Our feedback on Black Friday sales suggests November will show solid growth too. We may see some weakness in December as promotional fatigue sets in.
Australian retail sales rose 0.9% in September 2024 year-on-year. This was a deceleration on the 4.0% growth in August. August benefited from Father’s Day timing and promotional activity, which took sales from September. Looking at the September quarter, retail sales were up 2.5% compared long-term trends of 4.9%. Pharmacy, recreational goods and furniture were the non-food categories in growth during September. We see consumers delaying purchases in anticipation of Black Friday deals which means a more subdued October as well.
Australian retail sales rose 4.0% in August 2024 year-on-year. This was an acceleration on the 2.6% growth in July with online outperforming at 12.0% growth. Dining-out slowed, but supermarkets were strong. Afterpay Day, Father’s Day and better weather supported liquor, recreational goods and clothing spend. Pharmacy continues its strong sales growth. We expect sales growth to be softer in the next two months ahead of Black Friday promotions in November.
Australia’s national accounts showed that retail continued to miss out on spending growth in the June 2024 quarter. Total consumer spending rose 5.2%, while retail spending only increased by 1.8%. Households have continued to use some of their stored-up savings to maintain spending habits. The good news for retail is the reset, or mean reversion lower of retail spending, has now largely played out. We expect improved income growth and a better share of wallet for retail to result in slightly stronger retail sales growth in FY25e.
Australian retail sales rose 2.6% in July 2024 year-on-year. While overall sales trends remain weak, the standout was online, which was up 14.3% with strength in both food and non-food online. Amazon’s Prime Day has had spillover effects across the market. Hardware, Liquor and Takeaway Food were in decline in July. Pharmacy and furniture had good sales growth. We expect a gradual improvement in sales growth over the next six months led by non-food retail categories.
Australian retail sales rose 2.1% in June 2024 year-on-year. This continues recent weak trends, even though some of our feedback has been stronger over the past two months. The data does reveal smaller retailers are doing it tougher. There was a significant pick-up in fashion and department stores, modest pick-up in electronics with a slowdown in dining out and liquor. For FY24e, retail sales only rose 1.8%. We expect an acceleration to 2.9% for FY25e. The acceleration is likely to be modest given low household savings and dis-inflation for retail goods.
Australian retail sales rose 2.1% year-on-year in May 2024, which is the best underlying rate of growth since November 2023. The glass half-full would suggest we may be past the trough for retail. The glass half-empty is that the rate of growth is still very weak and indicative of per capita declines in retail volumes. We do think we are now past the trough in volumes, but we don’t expect a swift recovery in retail spending.
Australian retail sales rose 1.2% in April 2024. To adjust for the noise of the timing of Easter we also look at the combined March-April results which shows sales growth of only 1.3%. Department stores and fashion have had the most notable slowdown over the Easter trading period. Supermarket sales are also soft considering data suggests higher inflation in March-April. We forecast subdued retail sales growth trends to continue to June 2024, with a mild pick up for the back-half of calendar 2024.
The ABS has stated that its Retail Trade series will cease from July 2025 and instead the ABS will use its Household Spending Indicator to measure consumer spending. This is a risk for all users of retail data given the short history for the replacement data series. Bank transaction data exhibits more volatility and we may no longer have a reliable measure of retail market sizes. We need more data, not less to help retailers, suppliers, landlords, regulators and investors all make more informed decisions and maximise productivity for the industry.