Flat retailing trend confirmed by data
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SYDNEY, Feb 6 AAP
February 06 2013, 1:18PM
Retail spending flattened out over the second half of 2012.
It's hardly a controversial observation, but figures from the Australian Bureau of Statistics (ABS) on Wednesday confirm the plateau extended through to the end of the year.
The figures won't surprise the Reserve Bank of Australia (RBA), which on Tuesday said "a return to the very strong growth (in consumer spending) of some years ago is unlikely".
The value of turnover in retail establishments - which excludes motor vehicle and fuel sellers but includes on-line sellers registered in Australia - fell by 0.2 per cent in December, after adjustment for regular seasonal variations.
It was the third small fall in a row; the first three-in-a-row since the summer of 1999-2000.
With these monthly estimates a fall could always be the result of changes in prices.
But the quarterly estimates which adjust for price changes suggest otherwise.
In real terms, turnover rose by an inconsequential 0.1 per cent in the three months ending December 31 after a 0.2 per cent fall in the previous quarter.
In other words, there was a fall in the volume of goods and services sold by retailers turnover over the second half of 2012.
This represents a rather abrupt halt after a rise of 2.8 per cent, well above the historical average, in the first half of the year.
There is more than one likely contributor to the pause.
One is slow employment growth, with the latest trend estimates from the ABS showing very slow monthly growth of 7,000, compared with a recent peak of more than 19,000 a month early last year.
Slower growth in jobs means slower growth in disposable income.
Another is the decline in housing construction, particularly in the volume of work done on alterations and additions, over the second half of 2011 and the first half of 2012.
Housing activity tends to feed into retail spending.
Then there is the emergence of more conservative spending habits, including a preference to reduce debt, among households since the global financial crisis that came to a head in 2008.
Each of these factors probably plays a role in the flat trend in retailing since mid-2012.
And, because they all still apply to a significant extent, it's unlikely that retailing will pick up strongly in the first half of 2013.
Even so, a firmer share market and signs of a rally in housing prices, along with a likely ongoing impact of recent interest rate cuts, suggest some scope for growth rather than the flatlining now evident in the data.