FXStreet (Delhi) – Research Team at ANZ, note that that the Australian August retail sales grew by a solid 0.4% m/m but the trend remains modest thereby suggesting that the outlook for retail is softening backed by the fact that there are increasing signs that growth in house prices and construction activity will slow. This will reduce the wealth and income effects from housing and contribute to slower growth in retail spending into 2016.
Key Quotes
“Retail sales growth was in line with expectations in August; rising 0.4% m/m. Retail sales have been patchy month-to-month this year. Through the volatility, the trend remains soft.”
“Household goods retailing rose a modest 0.2% m/m after volatility in the previous two months. Trend monthly growth has slowed, although annual growth remains robust at 9.1% y/y.”
“The outlook for retail into 2016 is dimming. While retail business conditions point to solid growth ahead, this indicator has had a poor relationship with retail spending recently. Rather, we expect that a softening housing market and continuing weak wages growth will see retail sales growth slow into 2016. In particular, easing house price growth in Sydney and Melbourne could weigh on retail sales in those states.”
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