Ahead of the RBA meeting today is Australian data; retail sales and trade balance, both for December
I posted previews of the RBA here (and I'll have more to come):
- RBA meet this week - preview
- Australia - RBA meet for the first time in 2018 next week - preview
- AUD traders - RBA meet this week, first for the year - preview
And, previous preview of the retails sales is here:
More now, this Via Westpac:
Retail sales surged 1.2% in Nov, a surprisingly strong result that was the biggest monthly gain since Feb 2013.
- The ABS cited the launch of Apple's iPhone X and the increased popularity of 'Black Friday' sales as major factors with electrical and electronic goods retailers recording a 9.3%mth surge and sales for 'other retail n.e.c', which includes non store retailers, up 3.9%mth.
- Sales excluding these two sub-categories were up a milder 0.4%mth.
While there were clearly extenuating circumstances in Nov, 'underlying' sales look to have recovered somewhat from the weakness in Q3 with consumer sentiment improving steadily through Oct-Jan.
- That said, family finances are still under pressure with spending intentions subdued and private sector business surveys indicating retailers continued to struggle with soft conditions in Dec.
On balance we expect sales to retrace 0.3% in Dec as one-off factors drop out but leaving a modest gain over the last 3mths.
Also, Westpac on the Q4 retail sales data, excl inflation:
Retail volumes stalled in Q3, rising just 0.1% vs a 1.5% gain in Q2, a weather-affected 0.2% gain in Q1 and a 0.9% gain in Q4.
- The quarterly profile is choppy but has been tracking a weak underlying trend.
The Q4 update will show a significant improvement. Even with a pull back in the Dec month, nominal sales are on track to be up over 1% for the quarter.
- The Q4 CPI detail showed mixed results for retail prices. Intense competition saw increased discounting in categories such as household contents and clothing.
- However, food, which makes up over 40% of retail sales, posted a stronger than expected 1% rise in the quarter vs a 0.9% fall in Q3.
The mix suggests about half of the gain in nominal sales in Q4 is due to prices. We expect real retail sales to be up 0.6% for the quarter. With price moves mixed across categories, there is some upside risk to the quarter particularly if spending patterns have responded to relative price shifts.
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And, via RBC:
After an outsized gain in November driven largely by the new iPhone and Black Friday promotional sales, some payback is likely in December.
- Retail sales have been notably subdued for much of this year, as evidenced by the underlying trend, which is barely positive.
- While we expect a correction in December, we note that lower fuel prices in the month, firmer confidence, and positive anecdotes from retailers into Christmas may temper the correction.
- Accordingly, we look for a flat outcome in December.
And, for the quarterly figures:
- While we do not expect another negative deflator given some recovery in food prices in Q4, it will likely have remained benign, helping lift volumes in the quarter. We expect real retail sales to have risen by a solid 1.2% in Q4, providing a 0.2pp contribution to GDP, with consumption shaping up on the firm side in Q4 after a dismal Q4.
