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Australian Consumers Spooked As Sales Show Weakest Run In 7 Years

Published on Nov 4 2017 8:00 AM in Retail tagged: Trending Posts / Australia / Australian Retail

Australian Consumers Spooked As Sales Show Weakest Run In 7 Years

Australia’s heavily indebted households are pulling down the shutters on consumption as retail sales suffered the weakest three-month stretch in seven years.

Sales were flat in September, after slumping 0.5% the prior month and dropping 0.3% in July, government data showed Friday. That’s the worst run since 2010.

The currency dropped and traders pared bets on interest-rate hikes as the numbers suggested households are struggling to cope with record-high debt and record-low wage growth.

“The retail sector is on the ropes,” said Paul Dales, chief economist for Australia at Capital Economics Ltd. “Retailers discounted by more than usual and didn’t get much of a return from it.”

He now estimates that gross domestic product slowed in the third quarter to 0.5% from 0.8% three months earlier.

The Australian dollar bought 76.87 US cents at 12:32 pm in Sydney, down from 77.15 cents before the release.

Stagnant Sales

September’s stagnant retail figures follow weaker-than-expected inflation data for the third quarter as businesses failed to pass on sharp increases in electricity prices to consumers amid concern they’d drive them away.

Traders are now pricing in just over a 50% chance of a quarter-point rate increase in October next year.

Sales were dragged down by a 1.7% drop in other retailing, a category that includes newspaper and book shops, recreational goods and pharmaceutical toiletry and cosmetic goods. That was offset by a 2.1% surge in department stores as the discounting period came to a close.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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